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US Tariff Plan Could Drive Up Drug Costs by $51 Billion Annually, Says Industry Report

The analysis, conducted by global consulting firm Ernst & Young (EY) reveals that the U.S. imported $203 billion worth of pharmaceutical goods in 2023, with 73% sourced from Europe — notably Ireland, Germany, and Switzerland. By comparison, total domestic sales of finished pharmaceutical products reached $393 billion that year.

• By Newsdesk
• New Delhi
• Apr 25, 2025

News

A proposed 25% tariff on pharmaceutical imports into the United States could spike annual drug costs by nearly $51 billion, potentially inflating prices by as much as 12.9%, according to a new report commissioned by the country’s leading pharmaceutical trade group.

The analysis, conducted by global consulting firm Ernst & Young (EY) and reviewed by Reuters, reveals that the U.S. imported $203 billion worth of pharmaceutical goods in 2023, with 73% sourced from Europe — notably Ireland, Germany, and Switzerland. By comparison, total domestic sales of finished pharmaceutical products reached $393 billion that year.

The findings, dated April 22, were prepared for the Pharmaceutical Research and Manufacturers of America (PhRMA), a powerful industry group representing major drugmakers including Pfizer, Eli Lilly, Amgen, and Bristol Myers Squibb. While PhRMA declined to comment on the report, it has previously warned that sweeping tariffs could disrupt supply chains and derail efforts to strengthen U.S.-based drug manufacturing — a key priority for former President Donald Trump.

Pharmaceutical imports have largely been exempt from previous trade tensions due to their critical nature. However, the Trump administration has reignited the issue, launching investigations into the national security implications of relying on foreign-made drugs. The Commerce Department recently opened a 21-day public comment period on the matter.

Industry stakeholders, including legal advisors like Sidley Austin LLP, view the probe as a window to present less disruptive policy alternatives. Some companies are advocating for a gradual phase-in of tariffs to soften the financial blow. Swiss pharmaceutical giant Roche, for example, is seeking exemptions by arguing that its U.S. imports are balanced by significant domestic manufacturing and exports.

According to the EY report, approximately 30% of U.S. pharmaceutical imports in 2023 consisted of active ingredients and components used in domestic drug production. Tariffs on these intermediate goods would raise local production costs by around 4.1%, diminishing the global competitiveness of U.S.-made medicines. In 2023, the U.S. exported roughly $101 billion in pharmaceuticals, and higher input costs could threaten a portion of the industry’s 490,000 export-linked jobs.

While the report does not quantify the effect of retaliatory tariffs, it cautions that such measures could further compound the economic fallout for U.S. producers.

The analysis underscores a growing tension between trade policy and public health priorities, as the administration weighs economic nationalism against the risk of skyrocketing drug prices for American consumers.

(With inputs from Reuters)