President Donald Trump’s trade tariffs on Canadian pharmaceuticals are expected to increase costs in the United States and strain drug supply chains, according to an analysis published yesterday in JAMA.
Tomorrow, pharmaceuticals will no longer be exempt from the Trump administration’s 25% tariff on goods produced in Canada.
Writing in a research letter, scientists at the University of Toronto and their colleagues at Hertie School in Berlin and at the University of Pittsburgh, say the United States imports 400 different ready-for-use medications from Canada, 28 of which have no alternative supplier. Though not the largest source of medical drugs in the United States, Canada represents a significant player in the drug landscape.
Straining this supply chain could trigger drug shortages and jeopardize patient care.
“The proposed tariffs could affect a wide range of medications, from antibiotics to mental health treatments,” said Mina Tadrous, PharmD, PhD, lead author and assistant professor of pharmacy at the University of Toronto, in a university press release. “Straining this supply chain could trigger drug shortages and jeopardize patient care. We know that drugs with only one manufacturer and rapidly shifting supply chains increase the risk of shortages.”
Potential $750 million cost increase
In a comprehensive analysis of US pharmaceutical sales in 2022 and 2023 based on the National Institutes of Health’s DailyMed package inserts database, the authors found that 22,082 drug products were sold in the US market from the fourth quarter of 2022 to the third quarter of 2023, of which 411 (1.9%) were manufactured in Canada, representing $3 billion in sales.
Of the 411 Canadian drug products, 79% (323) were generic, and 21% (88) were brand-name products, including 20 (4.9%) under patent protection. Also, drugs with final production in Canada result in a subset of the pharmaceuticals, which would be subject to tariffs.
“We estimate that $3 billion in US pharmaceuticals depend on Canadian manufacturing, with 25% tariffs adding $750 million in cost,” the authors wrote. “Extending tariffs to larger suppliers (eg, China, India, Europe) could worsen the predicted effects, providing rationale for pharmaceuticals being exempt from tariffs to avoid increasing health care costs and worsening disruptions in US supply.”
Tadrous said the authors recommend that pharmaceuticals should be exempt from tariffs to prevent higher healthcare costs and worsening supply chain disruptions.
“Our work highlights that perhaps the U.S. should consider removing medications from its list of imports, in line with previous tariffs, to avoid disruptions to supply chains and potential shortages that may affect U.S. patients,” he said.