Dr Graeme Jarvis: Medicines NZ chief executive on Donald Trump's plan to introduce pharmaceutical tariffs

The Trump administration has hinted it could be looking into imposing tariffs on pharmaceuticals imported into the country.

Pharmac has since claimed the impact of these tariffs is 'unclear' - as it's unknown how it would affect the price of medicines at this stage.

Medicines NZ chief executive Dr Graeme Jarvis says it's too early to tell, and he doesn't want anyone to react too rashly.

"Around 20 percent of pharmaceutical manufacture is done in the US, the rest of it they import from global supply chains around the world at the moment."

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Episode Transcript

Speaker 1 (00:00):
Looks like US President Donald Trump will be putting those
tariffs on medicines. After all, pharmaceuticals were exempted from the
initial wave of tariffs that went out over the weekend,
but then US COMMAS Secretary Howard Lutnick said they've only
been exempted so that the President can put a different
tariff on them later.

Speaker 2 (00:15):
Well, if you remember, over the past couple of months,
President Trump has called out pharmaceuticals and semiconductors and autos.
He called them sector tariffs, and those are not available
for negotiation. They are just going to be part of
making sure we re sure the core national security items

(00:38):
that need to be made in this country. We need
to make medicine in this country. We learned it during COVID.
We need to make it in this country now.

Speaker 1 (00:45):
Doctor Graham Jervis is the CEO of Medicines New Zealand
And with US.

Speaker 3 (00:48):
Hey Graham, how are you?

Speaker 1 (00:50):
I'm very well, thank you. Now, the point of this,
obviously is to drive the manufacturing from China back to
the US. Do you reckon it'll work?

Speaker 3 (00:58):
Well, Look, I think it's really too early to tell
at this stage what will be happening. I think and
if I can just say to you listeners and yourself,
I think we need to calm the farm a little bit.
And I'm spelling farm with the phs and pharmaceuticals, So
no pun intended. But look, what the Trump administration is doing,
and what the Secretary has said is that they are
undertaking what they call a Section two three two investigation,

(01:22):
and that's looking at things that might be of a
national security issue. They will undertake that. They've started the process.
It usually runs for over two hundred and seventy days
in total, but they're open for inputs right now for
the next twenty one days or so, and then they'll
make some decisions around this. So it's a little bit
early to tell what the teriffs may be. If there

(01:44):
will be teriffs, they may decide not to do this
at all. So while there is that drive to have
some on shoring. Now, around twenty percent of pharmaceutical manufacture
is done in the United States, the rest of it
they are importing from global supply chain around the world
at the moment, if they.

Speaker 1 (02:02):
Were to go ahead with it, and it was significant
enough to kind of cause a bit of disruption, which
undoubtedly would happen for a little while. If they did it,
would the impact for US be actually that we ended
up having our market flooded potentially with cheaper drugs.

Speaker 3 (02:17):
No, I don't think that's the case. I think because
the global supply chain and the industry itself is quite complicated,
there's many permutations that could happen. It may depend on
things like how companies countries may react to any tariff
that may be put on. But I will just draw
you know, your listeners attention to the fact that the

(02:38):
industry is working hard at the moment with the Trump
administration to discuss what the implications will be. So, for example,
it is not clear at the moment if there will
be terraff supplied after this section two three two investigation.
We will have to see whether that's the case or not.
There are conversations going on about having a teared teriff

(02:59):
for approach, which means that the impact is a lot
less both into the US market but also globally as well.
And there are conversations and the companies have indeed started
to do more on shoring. So I'm well aware that
there is more drive to onshuring manufacturer into the USA.
I'm aware of at least twelve new large scale facilities

(03:20):
at the innovative pharmaceutical sector is looking at onshuring as
we speak, and that's about an eighty billion billion dollars
for b B billion dollars investment that has been driven
back into the USA. So there's a lot of things
up in the air, a lot of dust up in
the air at the moment, and we're just not too sure.

(03:40):
So I think at this stage too difficult to say
what might come into the future. I think a few
things have got to play out over a period of
time and then we'll be in a better position to
have I think an informed conversation around what might be
happening from a New Zealand context, but also globally what
this might well mean as well.

Speaker 1 (03:59):
Yeah, Graham and Oh, I think that's the best advice
read Trump is just you know, breathe through your nose
until the man actually does something. Grahama really appreciated this.
Graham Jarvis Medicines, New Zealand CEO.

Speaker 3 (04:08):
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