Fentanyl

Pharmaceutical industry groups caution that President Donald Trump’s tariffs on China, Mexico and Canada will likely exacerbate existing drug shortages in the US, raise drug prices and put generic manufacturers out of the market. The Trump administration imposed a 25% tariff on imports from Mexico and Canada and a 10% tariff on China on Saturday. The US relies on importing pharmaceutical products globally, in particular from China, which is a large supplier of APIs. Tariffs will put a strain on “already problematic drug shortages” by forcing generic manufacturers out of the market due to low profit margins, warned Association for Accessible Medicines CEO John Murphy. Generic manufacturers, many of which import key ingredients from China, already sell their products at very low prices, and extra taxes will only make this worse, Murphy said. As generic manufacturers cannot absorb the high cost, the increases are likely to fall onto patients. The Healthcare Distribution Alliance has also called for the Trump administration to reconsider including pharma products in the tariffs, stating drug shortages in the US will worsen. Further, the HDA has asked Trump to invest in domestic manufacturing for raw materials and finished drug products to improve the supply of medicines. Some foreign pharma manufacturers have already made plans to mitigate the threat of import taxes into the US. For example, South Korean manufacturer Celltrion is looking to buy up US factories as a means to sidestep the tariffs. The tariffs will stay in place until the “crisis” of illegal immigration and imports of illegal drugs like fentanyl into the US is “alleviated,” according to a White House press release on Saturday. Canada has already hit back and placed a 25% tariff on $107 billion worth of US imports, to be effective on Tuesday, Prime Minister Justin Trudeau said this weekend. Meanwhile, Mexico President Claudia Sheinbaum also said Mexico will establish its own tariffs in “defense of Mexico’s interests.”

Medtech CEOs have been addressing the possibility of tariffs since the election last fall, when Donald Trump was floating a blanket 10% to 20% levy against all imports from China. \n President Donald Trump said his administration will install 25% tariffs on goods from Canada and Mexico, ending the largely duty-free trade that the North American countries have enjoyed for years and complicating the supply chains of many U.S. medtech manufacturers.The measures, which also include a long-expected 10% levy on imports from China, are being handed down in response to illicit fentanyl being smuggled across U.S. borders, according to the White House. They are set to begin February 4.Analysts have estimated that about 75% of medical devices marketed within the U.S. are made outside of the country, with China and Mexico being top producers. Canada, meanwhile, serves as a major importer of U.S. medical devices. Prime Minister Justin Trudeau said Saturday that the country would immediately respond in kind if the duties take effect. Mexico’s president, Claudia Sheinbaum, also pledged retaliatory tariffs against the U.S.—though, by Monday morning, Sheinbaum said that she and Trump had reached an agreement to pause levies on the country for one month, in return for an increased Mexican troop presence at the border.  Last week, when asked about a news report that stated a possible tariff starting date of March 1, White House Press Secretary Karoline Leavitt said during her Friday briefing that the story was wrong—instead, they would be enacted within the following day. Leavitt did not offer details about possible exemptions, including for medically necessary items and other healthcare hardware.Exemptions are exactly what\'s being sought by the medtech trade association, AdvaMed—which said that import duties could trigger weaker investments in R&D as well as higher prices for patients and payers, in addition to industry layoffs and supply shortages.“We share President Trump’s goal to protect public health, as well as his deep concern for the terrible impact drugs have on too many Americans and on our health care system. This is also why we are concerned about tariffs on medical products from Canada, Mexico, and China,” AdvaMed President and CEO Scott Whitaker said in a statement, adding that the association has shared its worries with the White House.“Our industry is heavily regulated: FDA decides what products can be put on the market, and then Medicaid, Medicare, and the VA largely determine the reimbursement for procedures using medtech products,” Whitaker said. “Additionally, moving manufacturing from one facility to a different or new facility requires FDA approval, which makes it difficult in the short term to adjust production to the U.S.”“The increased costs posed by tariffs, and their functioning essentially as an excise tax in practice, could resurrect the climate of concern the medical device excise tax created for nearly a decade,” he added—referring to the comparatively smaller 2.3% levy that the industry fought for years to have removed from the Affordable Care Act, and was ultimately repealed in 2020 after a years-long moratorium.AdvaMed also noted that exemptions were provided for most medical devices in the tariffs imposed on China during Trump’s first term, and the association said it is advocating for a similar approach this time around.“We maintain that the potential supply chain disruption and its downstream effects on patients remain a risk, should tariffs be implemented. Shortages of critical medical technologies are a real concern in our initial modeling,” Whitaker said. “We hope that these critical facts resonate with the Administration, and we will continue to make our case on behalf of the patients our companies serve.” Last week, Intuitive Surgical disclosed during its earnings call that a “significant portion” of the company’s instruments are manufactured in Mexico. “We are internally evaluating what the impact of any potential tariff might be and therefore, how we might respond,” Chief Financial Officer Jamie Samath told investors Jan. 23. “So stay tuned, is what I\'d say.”Medtech CEOs have been addressing the possibility since the election last fall, when Trump during the campaign and as president-elect floated a blanket 10% to 20% tariff against all imports from China. At the time, several executives told investors their exposure might be limited, given that they had spent years working to diversify their supply chain and had sought local manufacturing for local markets.More recently, Trump has used the threat of tariffs as a bargaining tool. Earlier this month, the White House said it would implement 25% tariffs against Colombia if they did not agree to accept military flights of deported migrants. The country later agreed to the terms, according to CNN. He has also said he is considering tariffs against Denmark, home to Novo Nordisk and its weight loss drugs Ozempic and Wegovy, over the acquisition of Greenland.Editor’s note: This story has been updated with Trump’s Saturday actions, AdvaMed’s statement and the international response, including the one-month pause on Mexico\'s tariffs.