Trump has floated 25 percent tariffs on imports from Mexico and Canada, as well as expanded tariffs on Chinese imports. When it comes to drugs, health care industry insiders say Trump’s tariff plan could not only raise prices but also lead to shortages in the U.S.
Canada, China and Mexico are among the top five countries from which the U.S. imports pharmaceutical goods, with China accounting for nearly a quarter of all such imports as of 2021.
Health care industry insiders are hoping the incoming administration will instead enact nuanced, targeted tariffs.
What they’re saying:
“While China accounts for a growing portion of U.S. pharmaceutical imports, particularly [active pharmaceutical ingredients (API)] used in generic drugs, we believe the Trump administration is unlikely to impose hefty tariffs on these imports to avoid increasing U.S. drug costs,” said Arthur Wong, health care managing director at S&P Global Ratings.
“80 percent of the API is produced overseas. A lot of the components for devices are as well, including packaging, enclosures, delivery systems, etc. There will be an impact, especially for those products,” said Mark Hendrickson, director of supply chain policy at the health care improvement company Premier Inc.
Dan Izhaky, president of the American Medical Manufacturers Association, said the cost of medical equipment will “absolutely” go up in the short term if tariffs are implemented.
Jumpstarting domestic production of both medical equipment and drugs is no small order. Izhaky estimates it would take between 18 to 24 months to start manufacturing medical equipment, in ideal conditions. For manufacturing drugs, Hendrickson conservatively puts the timeline between three years and five years.
And if tariffs don’t disrupt medical supply chains, as Wong warns they could, experts are skeptical that they’ll help.
“If tariffs are put in place on health care products, as it stands, none of that money is going to help with any of those things that we think are very valuable,” Hendrickson said.
Welcome to The Hill’s Health Care newsletter, we’re Nathaniel Weixel and Joseph Choi — every week we follow the latest moves on how Washington impacts your health.
PROGRAMMING NOTE: We will not be publishing this newsletter tomorrow, New Year’s Day. See you Thursday.
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Essential Reads
How policy will be impacting the health care sector this week and beyond:
FDA testing aged raw cow’s milk cheese for bird flu
The Food and Drug Administration (FDA) will begin collecting samples of raw cow’s milk cheese from across the U.S. to test for the presence of bird flu, spurred on by the ongoing outbreaks of H5N1 in multiple states. In the announcement published Monday, the FDA said the goal of testing will be two-fold: detecting the H5N1 virus and taking the necessary follow-up actions to protect consumers. Raw, unpasteurized milk is …
Full Story
Medicare’s new drug price cap kicks in Jan. 1
A key cost-saving provision of the Inflation Reduction Act (IRA) goes into effect in the new year, limiting annual out-of-pocket spending on prescription drugs to $2,000 for Medicare beneficiaries. Starting on Jan. 1, 2025, an estimated 19 million Medicare beneficiaries will see their out-of-pocket Medicare Part D spending capped at $2,000 for the year. This annual cap will be indexed to the rate of inflation every year going …
Full Story
AI tool helps detect heart problems before symptoms start
British researchers have developed an artificial intelligence tool that can identify people at risk of a serious heart condition before symptoms appear, potentially preventing thousands of strokes, the BBC reported.
Full Story
In Other News
Branch out with a different read from The Hill:
A new generation begins in 2025, marking the end of Gen Alpha
(WJET/WFXP) — As we head into the new year, we’ll also be meeting a new generation: Generation Beta.
Full Story
Around the Nation
Local and state headlines on health care:
IU Health doctor files lawsuit regarding abortion reporting requirements (Indiana Public Media)
Resilient Schools: $10M initiative enhances mental health support for Tennessee students (WKRN)
New Mexico laws lowering taxes, easing access to medication take effect in 2025 (Source New Mexico)
What We’re Reading
Health news we’ve flagged from other outlets:
Her mental health treatment was helping. That’s why insurance cut off her coverage. (ProbPublica)
Drugmakers to raise US prices on over 250 medicines starting Jan. 1 (Reuters)
3 key issues to watch at the FDA as Trump takes office (Stat)
What Others are Reading
Most read stories on The Hill right now:
FBI: Largest homemade explosives cache in agency history found in Virginia
The FBI arrested a Virginia man it says had the largest stockpile of explosives recovered in the agency’s history. Brad Spafford was arrested … Read more
Chief Justice Roberts condemns elected officials for intimidating judges
Chief Justice John Roberts condemned elected officials who have intimidated judges and defied court rulings, highlighting them in his year-end … Read more
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