March 2025 Life Sciences Update

Will Potential Tariffs Impact Drug Costs?

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CONTENTS

API Sources for U.S. Medicines in 2021, In $Billions

Top 10 Countries for U.S. API

• The Biden administration’s use of the Inflation Reduction Act (IRA) to control Medicare drug costs created uncertainty for an industry already navigating patent expirations and the loss of exclusivity of some medications. • Further uncertainty arose with the passage of the Biosecure Act, aimed at securing the pharmaceutical supply chain. • The new U.S. administration has yet to clarify its stance on the IRA but is expected to support the Biosecure Act, which leaves a lot of policy direction on uncertain ground. More recently, the focus has turned to how potential tariffs will impact drug pricing. • Active pharmaceutical ingredients (APIs) are used in all drugs consumed in the U.S., with 53% (by dollar value) manufactured domestically and 47% produced abroad. Depending on the scope of potential tariffs, nearly half of the U.S. drug supply could be affected. • Increased drug costs will impact consumers and health systems alike, including hospitals that provide in-patient medicines.

Percentage of Total API

100%

Rank Country

1

USA

53%

Imported Medicines*, $16.3

90%

2

Ireland

19%

80%

3

China

7%

70%

4

Germany

4%

5

Singapore

4%

60%

6

Switzerland

3%

Domestic API, $45.4

50%

7

India

2%

8

Belgium

2%

40%

9

Italy

2%

30%

10

France

1%

20%

• Tariffs may also disrupt supply chains and aggravate ongoing drug shortages.

Imported API, $24.0

10%

0%

Source: Avelere; Cushman & Wakefield Research; * Imported medicines use foreign API

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Cushman & Wakefield