New pharmaceutical tariffs may lead to strong impacts on consumers

SOUTH BEND, Ind. — A new pharmaceutical tariff has taken effect bringing a 100 percent tariff on branded pharmaceutical drugs. According to Mariana Socal, an Associate Professor of Health policy and Management at John Hopkins Bloomberg School of Public Health, "If the person is paying, for example, 20 percent coinsurance, a 15 percent coinsurance, 25 percent coinsurance, those individuals will feel directly any changes in price. If the person is in the deductible phase, or if they're paying cash because they don't have the coverage. For some reason, all of these patients will feel the impact immediately if the price fluctuates because of the tariff."

Socal also adds that the US is paying up to four times more than other developed countries as is and that one in every four Americans cannot take a drug, they need because of issues with affordability.

An exemption of this tariff is if a company is building drug manufacturing plants in the US. This applies to buildings that are under construction, groundbreaking, or will soon open a new establishment.

Another impact these tariffs will have is on smaller hospitals and care centers who may not have access to funding like other big-name hospitals to be able to stock up ahead of this tariff taking place.

Socal says, “Some have but I can tell you, the problem is that those hospitals and pharmacies that can do that kind of behavior, that they can preemptively prepare. These are the ones that have higher revenues. They have more resources, right? So it really penalizes, you know, smaller hospitals, smaller pharmacies, independent pharmacies, rural providers.”

This tariff may lead to a chain effect because pharmaceutical drugs are provided through a supply chain. One company may have multiple locations around the world all in charge of one or two steps of the overall process.

Because of this chain effect there may be some delays in production according to Mariana Socal. "It needs regulatory approval, even if it's the same company, they can't just start producing in a different facility without notifying the FDA, the Food and Drug Administration, which is our regulator, and without getting approval, everything needs to be informed and approved in advance before those changes can happen. So, we are talking about a time horizon of at the very least six months to a year. It could take even more than that for any manufacturing changes to be implemented."