Analysis-Pharma companies expected to absorb any tariff hit in short term

Deena Beasley

Wed, Apr 16, 2025, 3:03 AM 4 min read

By Deena Beasley

(Reuters) -U.S. tariffs connected pharmaceuticals could yet mean higher prices for brand-name medicines, but successful the adjacent word the costs would apt beryllium absorbed by drugmakers alternatively than patients whose payments are often acceptable by wellness insurance.

U.S. wellness insurers, which wage the bulk of medicine cause costs, enactment arsenic a buffer betwixt drugmakers and patients, with beneficiaries taxable to co-pays and co-insurance based connected the prices insurers negociate with drugmakers.

"Patented drugs are already mostly acceptable astatine the terms the marketplace volition bear, truthful successful that consciousness manufacturers are not apt to substantially summation the prices of these drugs," said Melissa Barber, postdoctoral chap astatine Yale University and an adept connected cause pricing.

On Monday, the Trump medication said successful a regulatory filing it had opened a nationalist information probe into pharmaceuticals to amusement wherefore the U.S. needs tariffs to boost home manufacturing. Rates and timing stay uncertain, but the manufacture has been lobbying for phased-in tariffs.

The deed could beryllium big. Close to $213 cardinal successful pharmaceutical products were imported to the U.S. past year, astir triple 2014's $73 billion, according to the United Nations commercialized database.

And equity probe radical Bernstein Societe Generale estimated that U.S. tariffs could adhd $46 cardinal successful costs to the pharmaceutical industry, compared with existent yearly gross of $700 cardinal for large companies. The menace of import duties has already spurred drugmakers to accelerate shipments to the U.S. and warehouse supplies, which analysts accidental volition support their 2025 fiscal outlooks and instrumentality the unit disconnected immoderate contiguous terms increases.

Some tariff costs could yet beryllium shifted to patients and the taxpayers who money U.S. authorities wellness programs, but the existent hazard is to lower-margin, generic drugs, said Robin Feldman, a prof astatine UC Law San Francisco. Cheaper generic drugs, which are allowed aft patents expire connected branded products and are mostly made successful India and China, relationship for implicit 90% of U.S. prescriptions, but conscionable 17% of spending, according to the Association for Accessible Medicines.

The commercialized radical has said their members volition not beryllium capable to rise prices due to the fact that their margins are truthful thin. ING expert Diederik Stadig estimated that a 25% tariff connected India, for instance, would effect successful an summation of 17.5% for generic drugs produced successful India.

IMPACT ON R&D

Bill Coyle, caput of biopharma astatine consulting steadfast ZS, said drugmakers volition effort to walk connected tariff costs, but due to the fact that galore categories are precise competitive, "the existent downstream impact" would beryllium cost-cutting by companies.