Trump Takes Another Swing at Drug Industry in Made-in-USA Push
(Bloomberg) -- President Donald Trump's threat of 100% tariffs against generic medicines is a major expansion of a strategy he's been using against the pharmaceutical industry since his second term began.
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The US president has already threatened levies against makers of expensive branded medicines as part of his push to revive domestic manufacturing and lower American drug prices, which have long been the world's highest. However, extending the tariffs-for-manufacturing push to generics combines both elements of his drug policy in a way that may be difficult to reconcile.
Trump is threatening a 100% duty on a part of the drug industry that currently carries out little of its manufacturing in the US. By 2029, the US is expected to import about $50 billion of generic drugs, mostly from India, according to an analysis by Spencer Perlman, director of healthcare policy research at Veda Partners.
If the tariffs materialize, they risk upending a global supply chain that has kept generic medicines — which account for about 90% of all the drugs Americans take — more affordable in the US than they are in many other countries.
"For generics, the key point is that a future 100% duty would be a materially different shock from the current regime," said Jeremy Leonard, managing director of global industry services at Oxford Economics. Because generics makers compete mostly on price, the result could be higher prices and less availability in the US, as well as a search for exemptions. "The main effect is likely to be higher costs and supply disruption rather than a quick move of production to the US."
A look at Trump's track record so far shows that he is willing to negotiate and initial threats were often softened or moderated once the Administration issued its policies.
January 2025: Trump's drug tariff threats begin
Trump's tariff threats against drugmakers began soon after his inauguration last year. The president listed pharmaceuticals among the industries he'd target in a January 2025 speech, calling tariffs the "most beautiful word in the dictionary."
Over the following months, the president demanded that companies return manufacturing to the US and at times threatened rates as high as 250% on medicines. At the same time, the administration began an official probe into whether medicine imports were affecting national security under what's known as a Section 232 investigation.
Drugmakers, meanwhile, made a series of big-ticket announcements of US manufacturing investments in a bid to gain favor. In many cases these included production sites that had already been in planning, as part of companies' multiyear plans for capital investments. The White House's official tally, as of April, cites $448 billion in manufacturing expansions, including $50 billion by the UK's AstraZeneca Plc and $50 billion by Switzerland's Roche Holding AG.
In September, Trump announced a 100% tariff rate on patented drugs unless their manufacturers are building a factory in the US. Industry greeted the announcement with relief, with most large companies already either in possession of US plants or in the process of building them.
Crucially, generic drugs were exempted in last year's tariff announcement. While makers of high-cost branded medicines produce in the US, the cheaper generics that make up 90% of US prescriptions are largely made overseas.
May 2025: Trump seeks to tie US drug prices to cheaper overseas rates
Drug pricing is the second piece of Trump's push. One of his main directives targeting the industry is known as "most favored nation," which calls for pharmaceutical companies to price new medicines in the US at the level of other countries.
Trump has argued many times that it's unjust that American patients pay so much more for branded drugs than others elsewhere. It was an initiative he attempted to introduce in his first term, but it was blocked by federal courts and never took effect.
When Trump came back into power he took aim again, largely ignoring pleas from drugmakers that it's really the middlemen in the supply chain, who negotiate prices on behalf of employers and insurers, that push up the cost of drugs for Americans and not the manufacturers.
This time around, Trump adopted a more bargaining-style approach. He used public pressure, regulatory threats and singled out drugmakers with demands that they make pricing deals. Many did so voluntarily, starting with Pfizer Inc., which agreed to slash some of its drug prices by up to 85%. In return Pfizer secured a reprieve on tariffs. Others, including some of Europe's largest companies like Roche and AstraZeneca, soon followed suit.
Trump then launched a new website TrumpRx.gov in February to help Americans buy select medicines at a discount. It offers dozens of commonly used prescription drugs, including weight-loss drugs like Novo Nordisk A/S's Wegovy, and sends patients to drug companies' platforms where they can buy the products directly at a reduced rate.
Both of these initiatives were announced with great fanfare by the White House, and while some drugs for cash-paying patients and those on certain government programs will be lower, the real world impact on the highly complex US drug market is far less certain.
July 2026: Trump expands drug-production push to generics
On July 21, Trump reversed course on generic drugs, demanding on Truth Social that manufacturers also "reshore" production of cheap copycat medicines or face 100% tariffs.
The president's Truth Social posts don't always materialize as policy, said Nathan Gray, a senior research fellow at the Institute for International Trade at Adelaide University. Industry will need to wait and see what emerges in an actual executive order, Gray said.
If Trump does succeed in pushing through tariffs on generic medicines, it may wind up pushing up costs and having the opposite effect from what the president has said he wants to achieve, Gray said. That's because the cost structure in the US market, where consumers already pay far less for generics than those in other wealthy nations, relies on global supply chains.
"If they want to reduce costs for consumers, this is not the way to do it," he said.
Generic drug manufacturing moved overseas because of "cheaper land, labor, and parts, and fewer permitting barriers," according to Veda Partner's Perlman. He said even if substantial tariffs are applied the highly competitive, low-margin nature of the generics business means there will be little financial incentive to onshore production, adding: "In short, we think the President's generic drug tariff is impractical and undesirable politically and economically."
Sandoz Group AG, a large Swiss-based generic manufacturer, has a manufacturing network that consists of 15 sites globally, including just one in the US, whose closing was announced in 2024. On Wednesday, Sandoz said it was too early to assess the implications of Trump's announcement but added that generic and biosimilar drugs already make a significant contribution to lowering healthcare costs.
However, last year Sandoz Chief Executive Officer Richard Saynor said putting tariffs on generic companies would not spur them to move manufacturing, instead it will lead them to stop supplying vital medicines to the US.
"We sell a packet of antibiotics in the US more cheaply than a packet of M&M's," he said. "So why would I invest three, four, $5 billion over three to four years to bring in a product where I am not going to make any money? It's not going to happen."
--With assistance from Isabel Demetz, John Tozzi and Madison Muller.
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