Exclusive: U.S. Pharma Tariffs Could Hike Drug Prices by $51 Billion Annually, Report Warns

WASHINGTON, D.C. — A proposed 25% U.S. tariff on pharmaceutical imports could drive annual drug costs in the U.S. up by nearly $51 billion, raising the price of medications by as much as 12.9%, according to a new report reviewed exclusively by Reuters. The report, commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA) and conducted by Ernst & Young (EY), adds fresh urgency to an escalating policy debate that could significantly reshape the future of American healthcare.

Key Findings from the Report

• Estimated Impact: A full tariff pass-through could raise U.S. drug prices by 12.9%.

• Annual Cost: Tariffs would increase U.S. drug costs by $51 billion per year.

• Import Volume: The U.S. imported $203 billion in pharmaceutical products in 2023.

• Top Import Sources: Europe, led by Ireland, Germany, and Switzerland, accounts for 73% of pharmaceutical imports.

• Domestic Market Size: Total U.S. sales of finished pharmaceuticals reached $393 billion last year.

Background: Trump’s Push to Reshore Drug Manufacturing

The Trump administration has reignited its push to reduce reliance on foreign pharmaceutical manufacturing. A recent announcement revealed new investigations into pharmaceutical imports — framed as a national security priority — triggering a 21-day public comment period under the oversight of the U.S. Commerce Department.

Former President Donald Trump has repeatedly floated the idea of steep pharmaceutical tariffs as part of a broader campaign to lure drugmakers back to U.S. soil. However, industry stakeholders warn the policy could backfire, stifling rather than supporting domestic production.

“If duties are fully passed on to consumers, U.S. drug prices could spike significantly,” the EY report cautioned.

Industry Pushback: Concerns Over Cost and Competitiveness

Leading U.S. and global drug manufacturers — including Pfizer, Amgen, Eli Lilly, and Bristol Myers Squibb — have voiced strong opposition to the proposed tariffs. The PhRMA lobby argues the measure would increase domestic production costs, jeopardize exports, and reduce the global competitiveness of U.S.-made drugs.

According to the report:

• 30% of pharmaceutical imports consist of ingredients used in domestic manufacturing.

• Tariffs on these would raise U.S. production costs by 4.1%.

• 25% of U.S. pharmaceutical output is exported, totaling $101 billion in 2023.

• Higher input costs could threaten up to 490,000 export-related jobs.

Roche and Others Seek Exemptions

In response to the looming threat, companies are mobilizing to mitigate potential fallout. Swiss drugmaker Roche disclosed that it is in direct talks with the U.S. government to secure tariff exemptions. The company argues that its U.S.-made exports balance its imports, underscoring its contribution to the domestic economy.

Ted Murphy, a trade attorney at Sidley Austin, said the probe offers drugmakers a chance to explain that steep tariffs would hinder the very reshoring efforts the administration aims to promote.

Who Will Bear the Burden?

The report notes that tariffs on finished drugs are likely to be passed along to patients via wholesalers and retailers. While production costs are just one component of drug pricing, any additional costs are expected to ripple throughout the supply chain.

“Tariffs could inadvertently harm American patients by pushing drug prices beyond affordability,” one industry analyst noted.

Conclusion: A Costly Cure?

As the U.S. inches closer to making a historic decision on pharmaceutical tariffs, the numbers are stark. If fully implemented, the proposal could add billions to healthcare expenditures, risk export job losses, and raise fundamental questions about the balance between economic protectionism and public health affordability.

The debate is far from over. The next 21 days of public consultation may determine whether the administration doubles down on tariffs — or finds a more nuanced path to bolstering domestic pharmaceutical resilience without sending drug prices into orbit.