- Proposed 100% tariff on imported prescription drugs would double drug costs in the U.S.
- Economists warn the extra costs will fall primarily on American patients and insurers, not foreign manufacturers.
- Patented drugs, which face little to no competition, make it difficult for U.S. buyers to avoid price increases.
- Insurance premiums could rise as insurers pass on higher spending to consumers.
- Chronic patients are likely to be hit the hardest because they cannot reduce or avoid essential medication purchases.
Former President Donald Trump has proposed a 100% tariff on imported prescription drugs, aiming to increase costs for foreign pharmaceutical companies selling medications in the United States. The plan has attracted attention as it would apply to branded drugs brought in from countries outside the U.S.
According to public economic experts, including Justin Wolfers, the extra cost created by the proposed tariff would not pressure foreign drug firms to cut their prices. Instead, the expense would be passed directly to American patients and insurance companies, who could see the price of some branded drugs double.
“The Administration’s theory: Foreign drug companies will cut prices if Americans can buy elsewhere. The flaw: For patented drugs, there’s no competition and demand is inelastic. That’s the textbook case where buyers—American patients and insurers—eat the cost,” Wolfers said in a statement published on social media. In the pharmaceutical industry, many medications are protected by patents, which means only one company can sell them, eliminating competition and making it almost impossible for buyers to find alternative options.
Recent data points to mixed results in the pharmaceutical investment market. Some pharmaceutical ETFs (exchange-traded funds) have seen gains, while others have declined as investors react to ongoing discussions about the tariff. Experts note that patent-protected drugs create a monopoly, and tariffs work like taxes—consumers need these medicines and cannot reduce their demands, especially those with chronic illnesses.
Tariffs on competitive goods let buyers seek alternatives, but with prescription drugs, patients often have no other option. As a result, Americans could be forced to choose between their medications or other needs, and insurers, after absorbing higher costs at first, may raise premiums for consumers over time.
For more details, see the original article: Trump’s 100% drug tariff.
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