Pharmaceutical giants are actively lobbying the Trump administration and European Union officials to exclude medical goods from escalating trade disputes. They fear significant price increases and restricted patient access to essential medications.
The industry’s concerns centre on the potential impact of tariffs on top-selling drugs like Novo Nordisk’s Wegovy for weight loss and Merck’s cancer immunotherapy Keytruda.
In discussions with US officials, pharmaceutical representatives have emphasised that imposing tariffs on EU-made medicines would drive up drug costs, create barriers for patients, and undermine President Trump’s health-related executive orders to reduce drug prices and improve life expectancy.
According to industry sources, some companies are willing to expand manufacturing within the United States, contingent on receiving tax breaks and regulatory changes to facilitate this transition.
Simultaneously, industry executives are engaging with officials in Brussels, urging the EU to refrain from retaliatory tariffs, even if the US includes medicines in its trade measures. They have pointed to the precedent of excluding life-saving medicines from sanctions imposed on Russia following the invasion of Ukraine.
Potential impacts and market dynamics
Historically, pharmaceutical products have been spared from trade conflicts due to the potential for widespread harm. However, the Trump administration’s increased tariffs on goods from China, including finished drugs and raw ingredients, and the initial round of tariffs between the US and EU have raised concerns that medicines may be included in future trade actions.
While most medicinal supplies imported from China are of low monetary value, the US relies heavily on medicines partly manufactured in Europe, generating hundreds of billions of dollars in revenue. For instance, Novo Nordisk produces components of Wegovy in Denmark, and Merck’s Keytruda and AbbVie’s Botox are manufactured in Ireland.
Novo Nordisk CEO Lars Fruergaard Jorgensen has acknowledged the potential for short-term impacts from tariffs and indicated the company’s move to increase domestic production in the US, highlighted by a $4.1 billion investment in North Carolina.
Experts like Simon Baker of Redburn Atlantic predict that the US government, a major purchaser of drugs through Medicare and Medicaid, may face higher prices due to tariffs. Emily Field of Barclays notes a significant increase in client inquiries regarding potential drug tariffs.
Manufacturing challenges and industry response
The COVID-19 pandemic highlighted the US and EU’s reliance on China and India for critical drug ingredients, leading many drugmakers to diversify their supply chains. However, separating production ties between Europe and the US presents significant challenges.
Eli Lilly’s recent announcement of a $27 billion investment in new US manufacturing plants is an exception. Industry trade group PhRMA notes that building a new production facility in the US can cost up to $2 billion and take 5 to 10 years, including regulatory compliance.
A senior executive from a European drugmaker argued that creating a wholly US-based manufacturing process would divert funds from research and development of future medicines, “fixing something that is not broken.”
Industry sources remain uncertain about the Trump administration’s response to their concerns, given the president’s history of announcing tariffs only to later suspend or modify them. Trump’s recent criticism of Ireland’s tax incentives for pharmaceutical companies adds to the uncertainty.
The outcome of these lobbying efforts will have significant implications for drug pricing, patient access, and the future of pharmaceutical manufacturing in the US and Europe.
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