That is the topic of a JMCP Viewpoint by Sean Sullivan, Jens Grueger, Aidan Sullivan, and Scott Ramsey. Some excerpts:
The Budget Lab at Yale University projected that a 25% ad valorem tariff would increase medication costs by an “average of around $600 per year per household in the United States.”3 Tariffs can also create supply chain disruptions, increase costs and limit patient access to essential medications, and negatively impact research and innovation.
Pharmaceutical manufacturing is an international endeavor and tariffs will impose costs on supply chains.
Imposing tariffs will likely disrupt the movement of essential raw materials, active pharmaceutical ingredients, and finished medications. In the near term, disruptions will likely increase costs, delay access to treatments, and trigger shortages, especially for critical generic medicines with already tenuous supply, such as antibiotics, intravenous fluids, sterile injectables (e.g., epinephrine, heparin), and infused cancer therapies…Hospitals and pharmacies will face difficulties maintaining consistent inventories
The article also discusses how tariffs would be particularly problematic for generic drugs and who would be the winners (PBMs) and losers (pharmacies) with increased tariffs.
Generic manufacturers, faced with tariffs, will likely increase invoice prices for wholesalers and buying groups. This will translate to higher wholesale acquisition costs or average wholesale prices that pharmacies face. For generics, retail pharmacies are reimbursed by PBMs based on a maximum allowable cost (MAC). Increases to wholesale acquisition costs or average wholesale prices without a corresponding adjustment to MAC will leave the pharmacy financially strained, particularly independent pharmacies already disadvantaged in PBM contracts. The winner? The PBM that purchases and holds no physical products would pocket the difference until the MAC adjusts. For cash-based generics plans like Mark Cuban Cost Plus Drugs, razor-thin margins mean that a larger share of increased prices would be passed on to patients.
The article also notes that patients likely would payer higher costs as well–both out-of-pocket cost and premiums–directly from the tariffs and from higher production costs if manufacturing were re-shored to the U.S.
The article also argues that international collaboration–rather than disruptive tariffs–is a better path forward. Certainly seems sensible to me.
