Trump’s pharma tariffs could raise prices by 12.9%, report shows

An industry report commissioned by the Pharmaceutical Research and Manufacturers of America warns about price hikes resulting from President Donald Trump’s proposed 25% tariffs on drugs. 

The report, conducted by consultants at Ernst & Young, was not made public. However, journalists from Reuters were able to review a copy. 

According to the outlet, the leaked analysis found that the U.S. imported $203 billion in pharmaceutical products in 2023, with domestic sales hitting $393 billion. In short, the country relies heavily on other nations to meet domestic demand, with most imports coming in from Europe. 

The report warns that, should Trump officially levy his proposed 25% tax on drug imports, prices for patients in the U.S. could rise 12.9% on average, as the industry grapples with an additional $51 billion in annual costs. 

Further, many pharmaceutical imports are actually ingredients for drugs manufactured domestically. According to the report, that number may be as high as 30%—meaning that, even if a drug is made stateside, the price of manufacturing alone is likely to jump 4.1%.

To date, Trump has only “probed” the idea of pharma tariffs, opening up the idea to public comment. The industry is hoping the facts will persuade Trump that tariffs would make it more difficult to boost domestic drug manufacturing and lead to an inevitable price hike for patients. 

One thing missing from the Ernst & Young report is the potential impact of retaliatory tariffs. However, Reuters said the firm expressed concern that U.S. exports would be blunted by the Trump tariffs alone, resulting in reduced competitiveness abroad.

According to the report, 25% of domestic pharmaceutical output is exported, adding up to $101 billion in 2023. If tariffs are added to the equation, those numbers will likely drop. Additionally, some of the 490,000 jobs linked to drug exports would likely be put at risk.

For more, read the full exclusive from Reuters at the link below.