The news: US drugmakers may have to increase brand-name drug prices as a result of tariffs expected to hit the pharma sector, according to industry watchers.

Zooming in: Brand-name drugs are protected by patents and insulated from competition that drives prices down. Big Pharma could absorb tariff costs but could also pass them on to insurers and consumers, per CNBC.

Generic drug prices would increase too, but a 25% tariff on a once-a-day pill that costs less than a dollar would mean about $20 more for 24 weeks for a consumer, ING analysts calculated. However, brand-name cancer drug price increases could add $8,000 to $10,000 for a typical 24-week prescription, per ING.

On Tuesday, Johnson & Johnson was the first Big Pharma company to report Q1 earnings since the Trump administration took over. While the threatened tariffs on medicines are still pending, J&J estimated $400 million in tariff costs for 2025 on its medical devices.

Zooming out: Pharma products were the EU’s largest US export last year, estimated at $127 billion, according to Politico.

• European countries manufacture 25% of the active ingredients (APIs) used in making both branded and generic prescription drugs.
• US drug manufacturing accounts for 27% of APIs and almost half (48%) of finished dosage fills (FDFs).

Yes, and: The threat of tariffs may still not offer enough incentive for some Big Pharma companies to expand US manufacturing. They may take other steps like waiting out what could be temporary changes or cut R&D costs to compensate, according to Politico.

• Drugmakers, including Eli Lilly, Novo Nordisk, Novartis, and J&J, have agreed to build out more US manufacturing, but building plants can cost up to $2 billion and take 5 to 10 years, per the PhRMA industry trade group.
• Lilly CEO David Ricks told BBC in a recent interview that cutting R&D could be a necessary tradeoff in the near term if tariffs were imposed on pharmaceuticals.

The takeaway: Tariffs levied on the current manufacturing system that relies on EU and other countries’ ingredients production means the cost of making drugs would increase. And when it comes to already-expensive patent-protected brand-name drugs, noticeable price hikes for consumers are a likely consequence.

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