Can Donald Trump Lower The Price Of Medication?

Forbes

During the recent presidential campaign, President-elect Donald Trump repeatedly promised to lower drug prices, to the point where he falsely claimed credit for capping insulin prices, a policy actually enacted by the Biden Administration. He’s also pledged a hike in tariffs across the board, making it the centerpiece of his economic policy. “To me, the most beautiful word in the dictionary is tariff,” he said at a campaign event in October.  Read the full story on Forbes: https://www.forbes.com/sites/alexknapp/2024/11/14/trump-promised-to-make-your-medicines-cheaper-his-tariffs-will-make-them-more-expensive/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, Trump promised to make your medicines cheaper.

00:05His tariffs will make them more expensive.

00:08During the recent presidential campaign,

00:11President-elect Donald Trump repeatedly promised to lower drug prices,

00:15to the point where he falsely claimed credit for capping insulin prices,

00:19a policy actually enacted by the Biden administration.

00:23He's also pledged to hike in tariffs across the board,

00:26making it the centerpiece of his economic policy.

00:29At a campaign event in October, he said,

00:37But Trump can have one or the other, not both.

00:40And if his incoming administration succeeds in enacting the tariffs

00:44he's touted on the campaign trail,

00:46the end result will be higher drug prices for consumers

00:49and a slowdown of innovation in developing new therapies.

00:53Trump has promised a tariff between 10-20% on imports from most countries,

00:58with tariffs on Chinese goods at a minimum of 60%,

01:02and tariffs on Mexican imports ranging from 25% to 100%.

01:07Jack Zhang, director of the Trade War Lab at the University of Kansas,

01:11said that

01:16But this time around, Trump's proposing a universal tariff

01:19that would hit pretty much everything.

01:22The United States imports about $10.2 billion a year worth of pharmaceuticals

01:27from China alone, according to the Atlantic Council.

01:31That means heart medication, cancer treatments, and antibiotics,

01:35as well as over-the-counter pain relievers like ibuprofen and cough syrup,

01:39will all be more expensive with universal tariffs.

01:43Even domestic manufacturers rely on global supply chains,

01:47in particular for active pharmaceutical ingredients, also known as APIs.

01:52Here, tariffs would have an even bigger impact,

01:55as an estimated 72% of APIs in the U.S. market are manufactured overseas,

02:0013% of which come from China, according to USP.

02:05Beyond that, many of the key raw ingredients for those APIs

02:09are produced in China, per a 2022 report from Nikkei Asia.

02:14Mariana Sokal, associate professor at the Johns Hopkins Bloomberg School of Public Health,

02:19told Forbes,

02:21Drug supply is not easy to change overnight.

02:24As an example, just shifting from one production facility to another

02:28requires FDA inspections and approvals.

02:31Sokal added,

02:44If such a shift occurs, it's more likely that production would move

02:47from a higher tariff area like China to a country that has a lower one, like India,

02:52not back to the United States.

02:54And Trump's last round of tariffs during his first administration,

02:58which Biden continued, didn't work as hoped.

03:01It took government-enacted programs like the CHIPS Act to boost domestic manufacturing.

03:06Sokal points out that the capacity for increasing production of drugs and APIs

03:11simply doesn't exist in the U.S. right now.

03:14Building that out requires investment,

03:16which would be paid back in the form of higher prices.

03:19And establishing it in the United States is expensive enough

03:22that simply paying the tariffs may prove more cost-effective

03:26when it comes to the low-cost generics produced overseas in China, India, and Mexico.

03:31She said that patients will simply,

03:33face higher prices for the same product,

03:35with no change in the quality or supply or anything.

03:39Tariffs may also undermine new research and development in the pharmaceutical industry,

03:44because increased costs across global supply chains means less resources.

03:49Expect companies to focus on surer bets and fewer risks.

03:53Tariffs may also contribute to the Fed raising interest rates again to control inflation,

03:58which broadly have a cooling effect on investment in riskier companies,

04:02like those developing new gene therapies or new technology classes

04:06that haven't seen FDA approvals before.

04:09Similar raises during the Biden administration forced a slowdown in biotech investment

04:14that a JP Morgan report projects will bounce back in the fourth quarter this year,

04:18in part due to interest rate cuts.

04:21For full coverage, check out Alex Knapp's piece on Forbes.com.

04:27This is Kieran Meadows from Forbes.

04:29Thanks for tuning in.

04:32For more information visit www.forbes.com

Category

Transcript

Recommended