The escalating trade tensions between the United States and the European Union (EU) have ignited fears within the pharmaceutical industry, as drugmakers warn that the expansion of tariffs could severely disrupt the supply of life-saving medicines. As talks between U.S. officials and European drug companies continue, industry leaders urge the Trump administration and EU representatives to exempt medical goods from the widening trade conflict. The pharmaceutical sector fears that including drugs in the tariff dispute could lead to soaring drug costs and hinder patient access, directly contradicting President Trump’s health policy goals.

The Stakes for the Pharmaceutical Industry

The ongoing tariff negotiations could significantly affect top-selling medications manufactured in Europe, such as Novo Nordisk’s Wegovy, a leading weight-loss drug, and Merck’s Keytruda, a widely-used cancer immunotherapy. European drugmakers argue that increased tariffs would inflate drug prices and create barriers for patients needing essential medications, undermining efforts to reduce drug costs and increase life expectancy in the U.S.

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A senior executive from a major European drugmaker emphasized the urgency of the situation: “We are firmly delivering the message to the Trump administration and the European Union that patients will pay the price for tariffs.” The pharmaceutical industry is not only pleading for an exemption from tariffs but also exploring strategies to mitigate potential impacts, including expanding manufacturing capacity within the United States.

Manufacturing Adjustments and Industry Responses

Some drug manufacturers have already signaled their willingness to increase domestic production in the U.S., a move that could be supported by tax incentives and regulatory adjustments. Novo Nordisk, for example, announced a $4.1 billion investment to expand production facilities in North Carolina, aiming to reduce its reliance on European manufacturing sites.

Merck and AbbVie, makers of Keytruda and Botox respectively, have declined to disclose details about their manufacturing processes. However, industry sources suggest that shifting manufacturing operations to the U.S. would be both costly and time-consuming. Building a new production facility can cost up to $2 billion and take 5 to 10 years to become operational, considering regulatory requirements.

A senior executive from a European pharmaceutical firm warned that shifting manufacturing to the U.S. would divert crucial funds from research and development, jeopardizing future drug innovations. “We are fixing something that is not broken,” the executive stated, highlighting the inefficiency and risks of disrupting established supply chains.

The U.S. government, through Medicare and Medicaid programs, is a major buyer of pharmaceuticals, making the country particularly sensitive to price increases due to tariffs. Simon Baker, head of global biopharma research at Redburn Atlantic, noted that the U.S. healthcare system could face substantial price hikes to offset tariff-related costs.

Emily Field, head of European pharma equity research at Barclays, reflected growing concerns in the industry: “Until recently, I didn’t see tariffs on prescription drugs as a serious threat. Now, clients are asking about this nonstop.” The uncertainty surrounding trade policies adds pressure on drugmakers and healthcare systems, risking access to essential medications for millions of patients.

Interconnected Supply Chains and Global Manufacturing

The pharmaceutical industry relies on intricate global supply chains. Active pharmaceutical ingredients (APIs) and finished drugs often cross borders multiple times during the manufacturing process. For instance, some of Wegovy’s APIs are produced in Denmark, while Keytruda and Botox are manufactured in Ireland.

Pharmaceutical executives argue that interrupting these supply chains will hurt patient access to essential medicines, a concern shared across Western nations. “We as Western countries have interconnected supply chains in this sector. Interrupting these flows will hurt patient access to lifesaving medicines,” said another senior European drug executive. The industry views the potential tariff escalation as a lose-lose situation for both economies and healthcare systems.

Historically, pharmaceuticals have been spared from trade conflicts due to the potential harm to public health. However, the Trump administration’s approach to tariffs—previously affecting goods like steel and bourbon—has raised expectations that drugs might also be included in trade disputes. The majority of medicines imported from China to the U.S. are of low monetary value, but the dependency on European-manufactured drugs represents a far greater financial stake.

Government Responses and Industry Advocacy

Pharmaceutical companies are actively lobbying U.S. and EU officials to exclude drugs from the tariff negotiations. The industry cites the exclusion of life-saving medications from sanctions on Russia following its invasion of Ukraine as a precedent for their case.

The White House has yet to clarify its stance, and the European Commission has also refrained from commenting on the matter. President Trump has previously suspended or delayed tariffs, creating uncertainty over which trade policy philosophy the administration will adopt.

Drugmakers are navigating this uncertainty while continuing to press for regulatory changes that would facilitate expanded manufacturing in the U.S. Despite the pressure, industry insiders acknowledge the difficulty of rapidly shifting production without disrupting supply or escalating costs.

The COVID-19 Pandemic’s Role in Supply Chain Resilience

The COVID-19 pandemic exposed the vulnerabilities in global drug supply chains, particularly the reliance on China and India for raw pharmaceutical ingredients. The pandemic-induced scramble for materials used in vaccines and personal protective equipment (PPE) highlighted the risks of over-dependence on a few manufacturing hubs.

In response, many drugmakers have sought to decouple Western and Chinese supply chains. However, decoupling European and U.S. production processes was not seriously considered due to the integrated nature of the industry. Despite the pandemic-driven push for supply chain resilience, pharmaceutical executives argue that the existing U.S.-EU manufacturing collaboration has worked efficiently for decades and should not be disrupted by tariffs.

The Cost of Production and Regulatory Challenges

Building a new pharmaceutical manufacturing facility in the U.S. is a complex and costly endeavor. The PhRMA trade group estimates that such projects can cost up to $2 billion and take nearly a decade to complete, factoring in regulatory compliance and construction.

The senior European drug executive warned that allocating resources to build U.S.-based production would take funding away from drug research and development, where innovation is crucial. “We risk stalling progress in medical advancements by shifting our focus to address an artificial problem,” the executive noted.

The industry urges policymakers to prioritize patient access over trade tensions, emphasizing that increased drug prices would contradict Trump’s executive orders on reducing healthcare costs.

Potential Consequences for Patients and Healthcare Systems

Increased tariffs on drugs could lead to higher out-of-pocket costs for patients and financial strain on government healthcare programs like Medicare and Medicaid. As drug prices rise, healthcare providers may face difficult choices in prioritizing patient care and managing budgets.

Patients with chronic illnesses, cancer, and obesity—conditions treated by drugs like Keytruda and Wegovy—could experience decreased access to critical therapies, worsening health outcomes. The pharmaceutical industry stresses that price hikes and access barriers would disproportionately impact vulnerable populations.

The industry fears that any short-term cost increases could have long-lasting effects on drug affordability and healthcare accessibility in the U.S., undermining public health efforts and exacerbating existing healthcare disparities.

The Industry’s Call to Action

Pharmaceutical executives call for urgent action to prevent drugs from becoming targets in trade disputes. Industry leaders stress that the trade conflict risks reversing progress in healthcare access and affordability achieved over recent years.

A unified approach by the U.S. and EU to exclude pharmaceuticals from tariffs would signal a commitment to prioritizing patient welfare and maintaining robust healthcare systems. Drugmakers hope policymakers will recognize the interconnected nature of the industry and the potential harm tariffs could inflict on patients.

As the U.S.-EU trade tensions continue to escalate, the pharmaceutical industry stands at a critical juncture. The inclusion of drugs in the tariff spat threatens to disrupt supply chains, inflate drug costs, and hinder patient access to essential medications. Industry leaders urge policymakers to exclude pharmaceuticals from trade disputes, emphasizing that patient health and access to life-saving medicines must remain a top priority.

The industry’s plea to both the Trump administration and EU officials underscores the vital role of pharmaceuticals in healthcare and the importance of safeguarding access to critical drugs amidst broader geopolitical conflicts.