Proposed 25% Tariff on Pharmaceutical Imports Could Raise U.S. Drug Costs by Nearly $51 Billion Annually

A potential 25% U.S. tariff on pharmaceutical imports could lead to an annual increase of nearly $51 billion in U.S. drug costs, with prices potentially rising by as much as 12.9% if the costs are passed on to consumers, according to a report commissioned by the U.S. pharmaceutical industry's trade group and reviewed by Reuters.

Pharmaceutical Imports and Domestic Sales

The analysis, conducted by Ernst & Young, revealed that the United States imported $203 billion in pharmaceutical products in 2023, with 73% of those imports coming from Europe, primarily from Ireland, Germany, and Switzerland. In the same year, total U.S. sales of finished pharmaceuticals amounted to $393 billion.

Commissioned by the Pharmaceutical Industry

The report, dated April 22 and not publicly released, was commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA), the primary U.S. pharmaceutical lobby. PhRMA's members include prominent companies such as Amgen, Bristol Myers Squibb, Eli Lilly, and Pfizer, among others. PhRMA did not immediately respond to a request for comment. The group has raised concerns that imposing tariffs would undermine efforts to boost domestic manufacturing, a key objective of U.S. President Donald Trump.

Threats of Tariffs and National Security Concerns

While pharmaceutical products have traditionally been exempt from trade wars due to potential harms, President Trump has repeatedly threatened to impose a 25% tariff on pharmaceutical imports. Recently, the Trump administration announced investigations into pharmaceutical imports, citing national security concerns over dependence on foreign drug production. This announcement initiated a 21-day public comment period as part of the investigation led by the Commerce Department. Drugmakers view the probe as an opportunity to communicate to the administration that high tariffs would hinder their ability to rapidly increase U.S. production and to propose alternative solutions. Additionally, drugmakers have lobbied for a phased implementation of tariffs on imported pharmaceutical products to mitigate the financial impact.