CGTN Europe discussed this with Allie Renison, Former UK trade department official and now at consultancy SEC Newgate
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00:00Well, Ali Renison is a former trade policy advisor to the UK government and now works for the consultancy SEC Newgate.
00:08Ali, welcome back. Good to see you. What impact are these tariffs going to have in Ireland?
00:14Well, obviously, there has been a huge increase, as Donald Trump himself has noted, over the last 10 to 20 years of American pharmaceutical firms who are setting up in Ireland
00:23and then obviously exporting a lot of sort of drugs back to the United States.
00:28Now, I don't think that we're going to see some kind of forced relocation, more incentivized relocation of pharmaceutical manufacturing back to the US,
00:37as perhaps the president would like. But it certainly means that the costs, how they absorb them, might in the longer term have an impact on things like drug pricing.
00:47But I don't think we're going to see that in the short term.
00:49Let's just park the politics for a moment. And let me ask you about patience and what this might mean for the supply of drugs in the United States and elsewhere.
01:01I think we need to distinguish between the short and the kind of longer term and the longer term is just as important.
01:08However, in the short term, because medical sort of and pharmaceutical supply chains are so incredibly complex that actually it takes a while.
01:15There's usually a bit of a lag between, let's say, things like sort of tariffs taking effect and actually having a knock on effect on sort of drug prices at the pharmacy, for example.
01:24But longer term, you know, there is a question about as these manufacturers start to absorb the cost of potential tariffs, where do they pass them on and where do they actually end up?
01:35And the last thing I would say is that it's the big question is whether any kind of mooted tariffs.
01:40We've had this sort of Section 232 national security investigation into sort of drug manufacturing because the US imports about 75 percent of its pharmaceuticals.
01:48The big question is whether any tariffs for the sector actually end up applying to the finished pharmaceutical products or on the actual what we call the active pharmaceutical ingredients.
01:56That could make a big difference.
01:57Well, here's another big question. Who should deal with the extra cost?
02:01Should it be patients or should it be the pharma companies?
02:05Should they just take the hit?
02:09I mean, obviously, the drug companies are going to say that, you know, ultimately,
02:13while they don't want to have to do anything that would impact on kind of patient access to medicines,
02:18that there are a couple of different factors that might mean that they have to push up pricing.
02:22I keep in mind that one of Donald Trump's main pledges, both in his first term and this term, is to actually cut drug prices,
02:27because if you look at what the US charges for in terms of drug prices, it's much, much higher than many other parts of the world.
02:35And so I think what the drug companies are worried about is is less actually just about the tariffs.
02:39They're more worried about actually what kind of direct policy and regulatory action that Donald Trump and the agencies that oversee kind of drug pricing
02:47could actually have on what they call sort of innovation.
02:50Their argument is that if there's actual direct policy action to try and force them to lower their prices,
02:55that then they will have to put that up and that innovation will be at a loss as a result.
03:00So R&D might well take a hit in all of this.
03:03That's that's one of the biggest arguments that pharmaceutical companies are making at the moment,
03:07that all of the money from their their profits are effectively ploughed back into research and development and investment.
03:13And that is certainly the narrative that is being put out right now,
03:16is that if there is more direct action outside of tariffs,
03:19but actually direct policy action around things like what's called sort of reference pricing in international terms for sort of pharmaceuticals,
03:26that they are going to have to cut their investment in innovation.
03:29And that may be where we see the immediate impact rather than actually being passed on to patients.
03:34Ali, good to see you.
03:35Ali Renison, former trade policy adviser to the UK government and now at SEC Newgate.