The imposition of tariffs on generic drugs imported from China and India is projected to increase the cost of these medications in the United States and worsen existing drug shortages.
The imposition of tariffs on generic drugs imported from China and India is likely to drive up the cost of these medications in the United States and exacerbate existing drug shortages , experts warn. Approximately half of the generic drugs used in the U.S. — encompassing a range of crucial medications such as cancer drugs, antibiotics, and blood thinners — are manufactured entirely overseas.
Furthermore, a significantly larger proportion of the active pharmaceutical ingredients (APIs) utilized in drugs originate from abroad, with around 80% sourced from China and India.According to data provided by the United States Pharmacopeia (USP), a nonprofit organization dedicated to ensuring the safety of the drug supply chain, China's API manufacturing capacity has surged in recent years. In 2023, China boasted approximately 219 API facilities, a substantial increase from 134 in 2021. India continues to hold the position of the world's largest API producer, housing roughly half of all global API facilities.Unlike brand-name drugs, generics are sold at significantly lower prices, often nearing the cost of production. Any disruptions to this supply chain, such as tariffs, could have a cascading effect on prices. While shortages might be immediately apparent, experts anticipate a gradual price increase over the coming months. When generic drugs are channeled through distributors and the supply chain, contracts are typically established that may take several months to expire and be replaced with agreements reflecting higher prices. Vimala Raghavendran, vice president of informatics product development at USP, explained that companies typically maintain several months' worth of API inventory. Consequently, the impact of policy changes may take some time to permeate the supply chain.The Association for Accessible Medicines, a trade group representing generic drug manufacturers, has urged the Trump administration to grant an exemption from the tariffs. John Murphy III, president and CEO of the association, emphasized the reliance of U.S. medicines on a global supply chain already under significant strain. He stated that generic manufacturers are ill-equipped to absorb the added costs imposed by tariffs. Rena Conti, an associate professor at Boston University's Questrom School of Business, pointed out that existing safeguards, such as state anti-price gouging laws and a Biden-era tax on drugmakers raising prices faster than inflation, may mitigate the impact. Conti expressed concern about the potential for hospitals and pharmacies to stockpile drugs to avoid higher costs, a scenario that could exacerbate existing disparities in access to medication
GENERIC DRUGS TARIFFS DRUG SHORTAGES API CHINA INDIA COST INCREASE US PHARMACY
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