U.S. drug tariffs raise fears of higher prices and supply disruptions

U.S. President Donald Trump has announced a 100 percent tariff on branded and patented drugs from manufacturers that aren't setting up production in the United States, a move that has stoked public concern over rising prices and drawn criticism for disrupting global supply chains.

The measure, announced last week and due to take effect on Wednesday, has reportedly been put on hold by the Trump administration, but concerns have spread across the industry both domestically and internationally.

Industry experts have warned that the new tariffs will hinder drug research and development while driving up prices.

"Imposing new tariffs on medicines would undermine new U.S. investments because every dollar spent on a tariff is a dollar not available to build in America or discover cures," U.S. pharmaceutical lobby group PhRMA said on its website.

U.S. drugmaker Eli Lilly voiced opposition to the measure despite being exempt from it. "We do not support tariffs on pharmaceutical products; tariffs ultimately increase the costs of medicines, which have historically been excluded from international tariffs because of their life-saving nature and impact on patients," a company spokesperson told Indystar.

The tariffs, if implemented, are expected to hit smaller manufacturers especially hard, as many have production lines in Mexico and Canada and cannot afford the billions of dollars required to build factories in the U.S.

"It's likely that the companies that will be affected are certain smaller companies that are making more niche products," Aaron Kesselheim, a professor of medicine at Harvard Medical School and Brigham and Women's Hospital, told The New York Times. "That could be problematic for those particular patients."

The tariff decision has also sparked criticism overseas.

"We buy more pharmaceutical products from the U.S. by quite a distance than they buy from us. It is not in the American consumers' interest to impose a higher price on the exports from Australia to America, particularly given the degree to which their exporters to Australia benefit from that free trade as well," Australian Health Minister Mark Butler said in a statement.

The Association of Research-Based Pharmaceutical Companies (VFA), a German trade group, said a 100 percent tariff would deal a severe setback to Germany and Europe as pharmaceutical hubs, disrupt supply chains and drive up production costs, endangering patient care on both sides of the Atlantic.