There is a higher likelihood of newer and more expensive medicines being produced in the US or Europe, with Ireland emerging as a hub due to its tax benefits.
Many major pharmaceutical products, such as Merck’s keytruda, Eli Lilly’s Zepbound, and Johnson & Johnson’s Stellara, are at least partially manufactured in Ireland.
President Trump acknowledged Ireland’s significance in the pharmaceutical industry during a meeting with Prime Minister Michael Martin in March.
Why did American drug manufacturing move overseas?
US drug production peaked in 2006, coinciding with the loss of patent protection for several top-selling American drugs and the rise of generic manufacturers in India and China. The phasing out of incentives for manufacturing in Puerto Rico led to the shift of production overseas, particularly to countries like Ireland offering tax benefits.
In 2021, most major generic drugs, antibiotics, and antivirals in the US rely on active ingredients produced outside the country, posing a potential risk to domestic drug supply.
President Trump expressed concern about the US’s reliance on foreign sources for essential medicines like antibiotics.
One example is the production of amoxicillin, a common antibiotic, which is predominantly located in China, India, and Europe, highlighting the vulnerability of US drug supply chains.
Has drugs been previously affected by tariffs?
While drugs are typically exempt from tariffs under global trade agreements, recent tariffs imposed by Trump on Chinese imports have impacted drug manufacturers importing active ingredients from China to the US.
The additional costs of tariffs could potentially lead to drug shortages, particularly for generic drugs with slim profit margins, prompting manufacturers to consider exiting the market.
Will tariffs lead to drug shortages?
Tariffs on active ingredients from China may exacerbate existing drug shortages, especially for generic injectables that are more challenging and less profitable to produce compared to new drugs.
Concerns have been raised about the impact of tariffs on drug supply chains, particularly for essential medications like lidocaine, where most active ingredients are sourced from India.
Source: www.nytimes.com
