A report commissioned by the U.S. pharmaceutical industry’s trade group and conducted by Ernst & Young found that a proposed 25% tariff on pharmaceutical imports could increase U.S. drug costs by nearly $51 billion annually. The United States imported $203 billion in pharmaceutical products in 2023, with most coming from Europe, primarily Ireland, Germany, and Switzerland. The total U.S. sales of finished pharmaceuticals that year were $393 billion.
The main U.S. pharmaceutical lobby group, PhRMA, which includes companies like Amgen, Bristol Myers Squibb, Eli Lilly, and Pfizer, has argued that tariffs could undermine efforts to boost domestic manufacturing. The Trump administration has threatened a 25% tariff on pharmaceutical imports, citing national security concerns over reliance on foreign drug production. Drugmakers see the administration’s probe into pharmaceutical imports as an opportunity to show that high tariffs would hinder their efforts to ramp up U.S. production and have lobbied for phased-in tariffs instead.
The report also highlighted that tariffs on imported pharmaceutical ingredients could raise domestic production costs by 4.1% and reduce the global competitiveness of U.S.-made drugs. Approximately 25% of U.S. pharmaceutical output is exported, totaling $101 billion in 2023, with a portion of the 490,000 export-related jobs in the industry potentially at risk due to higher input costs. The report did not include the impact of possible retaliatory tariffs, which could have a more significant economic impact on U.S. producers.
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