This isn’t entirely new — it began during the end of Trump’s first term with executive orders aimed at lowering drug prices. While courts dismissed those earlier moves, citing a lack of public input, the Biden administration picked up the thread through the IRA, allowing Medicare to negotiate prices for the first time.
Now, the newly announced pharmaceutical tariffs are stirring debate around their impact on industry operations and drug accessibility. The US healthcare system, unlike other countries, is fragmented and lacks centralized price control. Studies show US prescription drugs are two to four times costlier than in other developed countries.
Under this new tariff model, Health Secretary Robert Kennedy is tasked with pushing drugmakers to cut prices — or face a “most favored nation” model that could slash prices by up to 90%. While that’s welcome news for patients, big pharmaceutical companies like Pfizer, Bristol Myers Squibb, and Novo Nordisk could see profit hits of up to 10%.
But the bigger concern is disruption. About 70% of active pharmaceutical ingredients (APIs) used in the US are imported. New tariffs (10% baseline, 25% for some nations) have already triggered stockpiling and are causing trade imbalances. Companies like Johnson & Johnson project hundreds of millions in added costs, while smaller players face survival threats.
Despite talk of bringing manufacturing back to the US, that would take 3–5 years, and tariffs on raw materials only add to the burden. Meanwhile, pharma stocks have seen volatility, and innovation is already slowing down.
Patients may benefit — or bear the cost — depending on how companies react. And with legal uncertainties and regulatory loopholes, the real impact remains to be seen.
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