Tariffs Expected to Worsen Shortages, Increase Drug Prices and Hurt Healthcare

From never-ending staffing shortages to a myriad of financial challenges from the COVID-19 pandemic, the past several years have been exceptionally difficult on the United States' healthcare system. Although many institutions have weathered the storm, some have resorted to private equity, some are on life support and others have closed their doors. Now, hospitals and health systems (and our country at large) are facing another unforeseen obstacle: tariffs on imports into this country. The presidential order imposes a 10% tariff on all countries, as well as individualized higher tariffs on the countries “with which the United States has the largest trade deficits.”

 

As the vast majority of supplies that hospitals depend upon to safely operate are imported (such as gloves, gowns, machines, medicines and IV supplies), the tariffs will undoubtedly increase costs at every level. Additionally, the tariffs are likely to have a significant harmful impact on the country’s pharmaceutical supply chain, particularly in the generic space, and could exacerbate existing drug shortages. A significant portion of active pharmaceutical ingredients (APIs) and finished medications are manufactured abroad, with a substantial percentage of APIs originating from India and China—countries that are being hit with major increases in tariffs.