Trump’s 100% Generic Drug Duty Threatens US Low-Cost Supply

[00:00:00]She said in a Truth Social post last night that he intends to push through a 100% tariff on generic drugs effective August 1st, 2028.

[00:00:11]If companies don't return manufacturing to the US, um, and this tariff would then be boosted to 200% a year later in 2029.

[00:00:21]Okay, 100%, 200%. But unusually for this president, um, this would not start until August 2028. So that makes me think that this is all about, um, drawing some lines in the sand and, uh, you know, kind of setting up a negotiation, a long term negotiation.

[00:00:41]I mean, the the timing is interesting. Some, um, analysts have noted that, um, by the time the 200% tariff would, in theory, be coming through, you know, his administration will not be, um, in power anymore at that point.

[00:00:55]And so it would really be up to the next administration.

[00:00:58]Um, we have seen, um, some commentators suggesting that, um, you know, this would be rolled back potentially by, by another administration.

[00:01:08]It is you know, there are many challenges associated with this for the generic drug industry, partly just because, you know, unlike makers of branded drugs, um, generic drug makers actually don't produce very much in the U.S. and that's because the U.S.

[00:01:24]is such a low cost market for generic drugs.

[00:01:27]Um, and it really depends on a supply chain in, um, in lower cost places for manufacturing, where are most, um, generic drugs manufactured?

[00:01:41]So the majority would be in India. It's a it's a big place for manufacturing. Yeah.

[00:01:47]Okay. And what I didn't know, uh, which I found out from your reporting. Um, generic treatments account for more than 90% of U.S. prescriptions.

[00:01:55]That is huge. Has it always been that level?

[00:01:59]Oh, that's a good question. If it's always been that level.

[00:02:01]Um, that I don't know. Uh, but it is at that level now.

[00:02:05]It's, you know, 90% of prescriptions, but I think something like 12% of costs.

[00:02:10]Um, and so you can see that, uh, that disconnect, um, you know, the U.S.

[00:02:16]is an expensive market for branded drugs, as we have all discussed, you know, so many times that, um, but it's actually cheaper to buy generic medicines in the U.S. than it is, um, and, and a lot of other wealthy markets. Um, yeah.

[00:02:32]We I thought it was interesting that you said, um, that most of the generic drugs that we get in the US are made in India. So you wonder whether this is a broadside at India overall, an attempt to just tariff imports from India.

[00:02:44]But you point out in your reporting that, um, there's a trade pact between the U.S. and India that was struck in February, which makes a certain stipulation about generic drugs.

[00:02:56]Can you just explain what what happened in February and how this threat affects that or doesn't. So, I mean, first of all, we should say that we'll have to see how all of this plays out.

[00:03:09]You know, of course, this we're discussing two social posts right now, not, um, official, you know, policy that has gone through, you know, lots of review and thought and discussion. So just setting that as a as a first point, uh, I think this has unsettled Indian drugmakers.

[00:03:29]Um, the you know, they're very surprised by this.

[00:03:34]Um, uh, the, the, the, I guess that they're potentially whether there would be a carve out for Indian drug makers, uh, you know, not sure.

[00:03:46]We'll have to see, um, Indian drug makers have said that for them, it's not practical to move operations to the US. Uh, and that to do that, they would probably have to raise prices.