April 6, 2018

What Trump's China tariffs could mean for Rx drug prices

Daily Briefing

    The Trump administration on Tuesday proposed 25% tariffs on thousands of Chinese-manufactured products, including a slew of raw ingredients U.S. pharmaceutical companies use to make prescription drugs.

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    According to FDA, more than 80% of the ingredients used to manufacture drugs sold in the United States are produced outside of the country, and China is considered a "major provider" of such products.

    About the tariffs

    The Office of the U.S. Trade Representative on Tuesday published a list of 1,300 Chinese products that could be affected by the proposed tariff. According to TIME, the Trump administration proposed the tariffs in response to trade tactics China has used to bolster its global market power in the technology sector.  

    The list contains several health care products, including:

    • Antidepressants;
    • Medical devices and diagnostic equipment, such as artificial joints, defibrillators, malaria diagnostic test kits, MRI machines, pacemakers, and syringes.
    • Raw ingredients used to manufacture U.S. drugs, such as insulin and the allergic reaction-reversing drug epinephrine; and
    • Vaccines.

    The office is accepting public comment on the proposal through May 11, and a hearing has been scheduled for May 15, according to TIME. Industry representatives during that timeframe will be able to lobby to have certain items removed from the list.

    Implications

    Patient advocates and drugmakers raised concerns that the tariffs would force generic drug manufacturers to raise prices—an outcome that would run counter to the Trump administration's goal of reducing prescription drug costs and increasing generic competition, The Hill reports.

    According to Bloomberg, while the cost of raw ingredients may not be significant to the price of some brand-name drugs, for which relatively high list prices help cover the costs of drug development and marketing, raw ingredients form a more significant component of the cost of generic drugs.

    The Association for Accessible Medicines, an organization that represents prescription drug manufacturers, said, "We are concerned that the proposed tariffs may lead to increased costs of manufacturing for generics and biosimilars and thus higher prescription drug prices for patients in the [United States]."

    Ben Wakana, executive director of Patients for Affordable Drugs, said, "For an administration that wants to lower drug prices, this would do the exact opposite."

    Representatives for Teva Pharmaceutical, Novartis, Mylan, and Pfizer, which are among the largest U.S. generic drug manufactures, either did not respond to requests for comment or declined to comment, according to Bloomberg.

    In a tweet Wednesday, President Trump defended the proposed tariffs. He wrote, "We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!" (Langreth/Edney, Bloomberg, 4/3; Bloomberg News, 4/3; Biesheuvel, Bloomberg, 4/4; Baker, "Vitals," Axios, 4/4; Hellmann, The Hill, 4/4; Wiseman, TIME, 4/4; Trump tweet, 4/4).

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