The US is facing a potential crisis in its generic drug supply chain as newly imposed tariffs on imports from China and other countries threaten to increase costs and create shortages. Experts warn that the impact will be particularly severe for essential medications like cancer treatments, antibiotics, and blood thinners, which are heavily reliant on overseas production.
The recently imposed tariffs on imports from China and other countries are expected to significantly impact the cost of generic drugs in the United States and worsen existing drug shortages , according to industry experts. Approximately half of the generic medications used in the U.S., encompassing a wide range of essential drugs like cancer treatments, antibiotics, and blood thinners, are manufactured overseas.
Furthermore, an even larger proportion of the active pharmaceutical ingredients (APIs) used in these medications, around 80%, are sourced from foreign countries. Data from the United States Pharmacopeia (USP), a non-profit organization dedicated to ensuring the safety of the drug supply chain, reveals a concerning trend: China's API production facilities have surged from 134 in 2021 to approximately 219 in 2023. India remains the world's largest producer of APIs, accounting for roughly half of all manufacturing facilities. Unlike brand-name drugs, which are priced higher, generics are typically sold at significantly lower costs, often close to the cost of production. Consequently, any disruptions to this supply chain, such as tariffs, are likely to directly translate into increased prices for consumers. While immediate shortages are anticipated, experts predict that price hikes will follow in the coming months. They explain that generic drug distributors and suppliers often operate under long-term contracts. It may take several months for these contracts to expire and be replaced with new agreements reflecting the higher costs associated with tariffs. However, some safeguards may mitigate the impact of these tariffs. State anti-price gouging laws and a Biden-era tax on drugmakers that increase drug prices faster than inflation could provide some protection. This tax could discourage manufacturers from excessively raising prices. Nonetheless, concerns remain about the potential for hospitals and pharmacies to stockpile drugs in anticipation of higher costs, which could exacerbate existing disparities in access to medication. Professor Rena Conti, an associate professor at Boston University's Questrom School of Business, has already observed pharmacies reviewing their drug lists to identify products potentially vulnerable to price increases due to tariffs. She emphasizes that better-resourced hospitals and pharmacies may be able to secure larger quantities of essential drugs, leaving smaller, rural, or financially constrained healthcare providers at a disadvantage. Arthur Caplan, head of the division of medical ethics at NYU Langone Medical Center, expresses doubts that the tariffs will stimulate domestic API production. He points out that the imposition of tariffs, including those on neighboring countries like Mexico and Canada, further limits the U.S.'s ability to rely on regional sources for essential medications.
GENERIC DRUGS TARIFFS DRUG SHORTAGES CHIAN INDIA API UNITED STATES PHARMACOPEIA DRUG PRICES
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