Pills, Prices, and Politics: Will Tariffs Increase Drug Costs?

There was a time when most of the medications taken by US citizens were made in America. That included both brand name pharmaceuticals as well as generic drugs. Manufacturing started changing towards the end of the 20^th century. By 2000 many of our most important drugs were made abroad. Today, more than 90% of our generic drugs are made in foreign countries. Only 4% of the active pharmaceutical ingredients (APIs) are made in the USA. Will tariffs increase the cost of our medicines?

Do You Know Where Your Pills Came From?

You have no doubt heard that there will be steep tariffs on products from Canada, Mexico, China, Vietnam, Taiwan, India and a good chunk of Europe. At last count, over 100 countries will be affected. Where do most of our medicines come from? India, China, Europe and Singapore. Canada also supplies a fair number of pharmaceuticals. More about that momentarily.

We have been decrying the migration of pharmaceutical manufacturing abroad for many years. Going where wages are low and oversight is often inadequate has led to an extraordinary number of recalls. That’s because of poor quality control, short cuts, mistakes and outright fraud. We have documented these problems so many times we have lost count. Here are just a few examples.

“Another Disappointing Drug Import Alert from India“

“Drug Recalls From India – Do You Trust Foreign-Made Generics?“

“A Generic Drug Scandal That Amazed Even Us!“

We are all for encouraging drug companies to bring pharmaceutical manufacturing back to the US. Congress used to reward drug makers if they built pharmaceutical plants and made medicines in Puerto Rico. That policy has seemingly faded away.

Will Tariffs Affect The Cost of Your Medicines?

One of our go-to sources for an insider’s perspective on the pharmaceutical industry is FIERCE Pharma.

On April 2, 2025 this publication reported:

“Notably, while Trump did allude to tariffs on automobiles, the President neglected to mention the ‘25% or higher’ industry-specific duties on pharmaceutical imports that he threatened again during a Cabinet meeting last week.

“Further, the reciprocal tariffs—considered the cornerstone of the plan—exclude ‘pharmaceuticals,’ according to a White House fact sheet issued shortly after Trump’s address

“Still, the omission of medicines from Trump’s latest round of country-specific import taxes does not mean pharmaceutical-specific tariffs are off the table. Plus, it’s not entirely clear that the reciprocal tariffs as presented won’t cause some sort of disruption to the biopharma industry.”

What’s not entirely clear is whether all pharmaceutical products are temporarily exempt. In other words, “finished products” such as the tablets, capsules, and injectable pens may be safe for now, but what about the APIs (active pharmaceutical ingredients)? They are the guts of any medication. An example is semaglutide, the API in Wegovy and Ozempic.

An expert cited by FIERCE Pharma points out:

“‘If APIs are still tariffed, generic drugs and the ability to produce them at low cost would be impacted,’ Stoll explained. ‘So, the big question is ultimately where do the tariffs start or end. If the tariffs are on the pieces that come together to make drugs, such as API, that will have an impact on costs.’”

The Murky Tariff Story on Medicines:

As you can tell, this price picture is out of focus.

USA Today (April 3, 2025) quoted the president this way:

“In announcing his broad tariff plan, Trump said U.S. drugmakers will come ‘roaring back’ with new domestic manufacturing or they will ‘have a big tax to pay’ on imports.

“The pharmaceutical industry isn’t celebrating just yet. Trump has mused on multiple occasions that there could be trade actions for the pharmaceutical industry, which has globalized since the 1990s with a drug supply chain that stretches from Europe to India.”

There is some doubt that generic drug manufacturers will rush to build large manufacturing plants in the US. That’s because the cost to make such drugs in the US remains dramatically higher than in India or China.

We would love to see meaningful incentives that might encourage drug manufacturing in the US. Remember the old policy with Puerto Rico! When generic medications are made in the US, the FDA can show up unannounced and more easily inspect the plants.

What About Canadian Medicines?

The drug manufacturing industry in Canada and the US has substantial overlaps, so a group of investigators considered how the proposed tariffs might affect the US drug supply and costs JAMA, March 31, 2025. Of the 411 drug products manufactured in Canada and sold primarily in the US, the vast majority, 323, were generic products. 21% were brand name products, including 5% still under patent protection.

In addition, a substantial number of medications have components that are manufactured in Canada. 23 of these are clinically important, and shortages have plagued about half of these in the past. The authors estimate that $3 billion in US pharmaceuticals depend on Canadian manufacturing. Applying 25% tariffs would increase the cost by $750 million. They point out that even minor changes in the supply chain have resulted in shortages in the past.

So far, though, we are assuming that Canadian medications have also remained exempt from tariffs. That is good news for Americans who have found brand name prices unaffordable in the US. We have frequently written that it can make economic sense to purchase these very pricey brand name medicines from legitimate online Canadian pharmacies. Here are just a few such articles:

“Can You Trust Canadian Online Pharmacies?“

“Can You Save Money by Importing Drugs from Canada?“

Final Words

It looks as if Americans may have dodged the Pharma tariff bullet for now. What tomorrow will bring is anyone’s guess. The high cost of medicine is a hot-button political issue. Brand name drugs are already outrageously expensive in the US compared to other countries. Raising the prices even higher because of tariffs would likely create quite an outcry.

The quality of generic drugs made abroad remains another controversial topic. We would love to see generic drug manufacturing return to the US. It remains to be seen if that will happen in our lifetimes.