Trump’s pharma tariffs could raise drug prices for consumers, but exemptions may blunt impact

Analysts already warn that American consumers could see higher prices due to the new rates that President Donald Trump plans to impose on imports of drug products next week.

But a series of exemptions can dull the ultimate impact.

In a social article on Truth Thursday evening, Trump said that all brand pharmaceuticals or patented brought to the United States would face a 100% price from October 1.

American imports of pharmaceutical products totaled around $ 213 billion in 2024, a triple increase compared to a decade earlier, according to data from the United Nations Comtrade database.

Asia alone representing a little more than 20% of these imports per value, American consumers could see a “significant commercial blow,” said Louise Loo, head of Asia Economics at Oxford Economics Research Group, in a note to customers.

Previous studies have shown that US annual expenditure per capita in prescription drugs are almost double the developed world. In July, Trump announced a plan to “get the best prices in the world for prescription drugs” which involved asking major drug manufacturers to correspond to the low prices they offer elsewhere in the world.

However, it is not clear what actions that pharmaceutical companies have taken to start responding to this request. The pharmaceutical industry already warns that new prices could derail the development of drugs while increasing prices.

“Each dollar spent in prices is a dollar that cannot be invested in American manufacturing or the development of future treatments and remedies,” said Alex Schriver, vice-president of the sentence, the main lobbying group of the pharmaceutical industry, in a press release. “Medicines have always been exempt from prices because they increase costs and could cause shortages.”

Despite these warnings, a large part of drug products could be exempt from new import rights.

The prices do not seem to apply to the so-called generic drugs, which represent 9 out of 10 prescriptions filled in the United States, according to the Food and Drug Administration. The White House did not immediately respond to a request to confirm the exemption from the generics, but assuming that they will remain without a price, the impact on consumers could be more limited than the fearing.

Trump also said that pharmaceutical companies that have currently or have committed to building drug manufacturing facilities in the United States would be exempt from prices. This is a category that includes many major drug manufacturers.

“Many pharmaceutical companies have installations in the United States, so it can be relatively easy to expand these facilities superficially to prevent the prices from being applied,” wrote Paul Donovan, global economist at UBS Global Wealth Management, in a note to customers.

JPMorgan analysts agreed: “Although there are very limited details, we note that this will probably lead to a majority of pharmaceutical products excluded from any rate”, because most large companies have recently increased or have started to increase their American manufacturing facilities.

On the Maison Blanche website, the administration maintains a “execution list of new American investments” of private companies. At least 15 manufacturers of pharmaceuticals or medicines are listed with investments ranging from new manufacturing facilities, tens of billions of dollars in extended American production and increased R&D expenses. Many of these announcements seem to meet the requirements presented by Trump to avoid the new price.

Two major manufacturers of European drugs, Roche and Novartis, said in statements that they did not expect the impact little or not newly announced tasks.

“We work to make sure that all the main Novartis drugs for American patients are made in the United States,” said Novartis said in a press release. “The 100% announced price should not have an impact.” Roche underlined the construction of the current factory in the United States, with several expanded and improved sites in Kentucky, Indiana, New Jersey and California.

Trump has reported at least April that drug imports would face prices. In anticipation, the main drug manufacturers said they had stored supplies, analysts said.

Consequently, consumers are unlikely to feel immediate effects, even if the prices should come up next week.

“We believe that there may have been an accumulation of important inventory this year,” said Neil Shearing, chief economist of the group in capital economics, in a note.

This summer, Trump has placed a maximum 15% price on most pharmaceutical products from the European Union, which represents 60% of drugs imported by USEU officials think that this agreement will protect it from 100% rights, although they have declared that they could not be certain.

“This rate of 15% rate of 15% all inclusive for EU exports represents an insurance policy that no higher tariff will emerge for European economic operators,” a spokesman for the European Commission said on Friday.

The Irish Deputy Prime Minister Simon Harris, who also acts as Minister of Commerce, said that his country “studies the impact of this announcement”, but added that he thought that the 15% ceiling on the pharmaceutical rates remained in place. Ireland alone represents 24% of pharmaceutical imports to the United States