Drug, device makers scramble for tariff exemptions, warn of supply disruptions

Editor's note: A previous version of this article contained a misspelling of a name. Regulatory Focus regrets the error.

Drug and device manufacturers are raising concerns about President Donald Trump’s tariffs on imports from China, Mexico, and Canada, warning that they could worsen tensions in medical supply chains and lead to shortages, if their products are not exempted.

On 1 February, the White House announced the imposition of tariffs on imported goods from Mexico, Canada, and China. On 3 February, President Trump announced a 30-day pause on the tariffs for goods imported from Mexico and Canada; however, the 10% tariff on imports from China remains in effect. This action was taken to “hold Mexico, Canada, and China accountable for their promises to halt illegal immigration and stop the flow of harmful fentanyl and other drugs into our country.”

Trade groups representing the pharmaceutical and medical device sectors opposed the tariffs and are pushing for exemptions.

In response, the Association for Accessible Medicines (AAM) stated that the tariffs could exacerbate drug shortages.

“The global supply chain for generic and biosimilar medicines is critically important for U.S. patients. From the base ingredients to the finished products, U.S. medicines rely on a global supply chain that is already stressed and in need of strengthening,” said John Murphy III, AAM president and CEO. “Tariffs on products from Canada, Mexico, and China could increase already problematic drug shortages.”

A statement from the Healthcare Distribution Alliance (HDA), which represents pharmaceutical distributors in the US, stated that tariffs on pharmaceuticals could strain the US pharmaceutical supply chain and urged the Trump Administration to exempt pharmaceuticals from the tariffs.

“We are concerned that placing tariffs on generic drug products produced outside the U.S. will put additional pressure on an industry that is already experiencing financial distress. Distributors and generic manufacturers cannot absorb the rising costs of broad tariffs. It is worth noting that distributors operate on low profit margins — 0.3 percent. As a result, the U.S. will likely see new and worsened shortages of important medications and the costs will be passed down to payers and patients, including those in the Medicare and Medicaid programs.”

In a recent statement, the Advanced Medical Technology Association (AdvaMed) also expressed its concerns about the potential impact that tariffs could have on the medical technology supply chain.

The group noted that during President Trump’s first term, most medical devices were exempt from tariffs on China due to these concerns, and they are advocating for a similar exemption this time. AdvaMed stated that "we will closely monitor any effects the tariffs may have on this critical supply chain and share that information with the Administration."

An official from USP stated that the effects of higher tariffs would not be immediate, and it would take several months before their impacts are observed.

Vimala Raghavendran, vice president of informatics product development at USP, stated that there is a significant dependence on China for antibiotics, heparin, and vitamins. Typically, companies maintain several months' worth of active pharmaceutical ingredients (APIs) in inventory. As a result, any effects from policy changes may take some time to impact the supply chain.

According to USP’s Medicines Supply Map, companies in China, as well as India and Europe continue to play an outsized role in manufacturing active pharmaceutical ingredients (API) used in products destined for the US market in terms of locations cited in API drug master files (DMFs) filed with the US Food and Drug Administration (FDA). (RELATED: USP: India and China continue their API manufacturing reign, Regulatory Focus 8 November 2024).

Drug, device makers scramble for tariff exemptions, warn of supply disruptions

Related topics

Recommended content

Welcome to the new RAPS Digital Experience