When President Trump decided to implement tariffs on the imports of Chinese products, he wasn’t talking only about steel and textiles. According to the association representing the generic drug industry, the active ingredients of many pharmaceuticals—including biologics and biosimilars—could also be affected.
Physicians and patients are largely unaware of where their medications are actually manufactured. According to the Food and Drug Administration, in excess of 80% of the ingredients of drugs used in the US are manufactured beyond our borders. Even if a US facility produces the final agent, the individual components may come from sources outside of this nation.
Each drug comprises active and inactive ingredients (such as precipitates), and many are sourced from different locations. The pharmaceutical industry manages this carefully. Plants in China and India, for example, are popular because of their ability to provide cost-effective compounds that meet the good manufacturing practice (GMP) standards set by the FDA and the European Medicines Agency.
The US Trade Representative published a list of products produced in China that could be affected included insulin, growth hormone, antibiotics, amphetamines, immunologic products (e.g., vaccines), diagnostic test kit components, and other medical device materials (e.g., hip and knee implants).
A 25% tariff on imports from China imposed by the Trump Administration would obviously increase the price of the active ingredients of some generics and branded products alike, according to a statement by Jeffrey K. Francer, Senior Vice President & General Counsel, the Association for Accessible Medications. “We are assessing the proposed tariff list of pharmaceutical ingredients and products by the US Trade Representative and its possible impact on manufacturing costs for affordable, FDA-approved generic and biosimilar medicines,” he said. “We are concerned that the proposed tariffs may lead to increased costs of manufacturing for generics and biosimilars and thus higher prescription drug prices for patients in the US.”
Beyond higher costs, another related problem could arise. The pharma supply chain could be disrupted in a trade war with China. Pharmaceutical companies will need to review their options, which may entail requiring new inspections and approvals before changing the source of these needed ingredients. This could result in production delays and perhaps further price increases driven by supply gaps.
The Trump Administration has hit the pharma industry hard for its high prices. Wouldn’t it be ironic if the President himself compounded the problem with this short-sighted solution?