What Older Adults Need to Know About Possible Tariffs on Prescription Drugs

In late September 2024, Hurricane Helene rolled through western North Carolina in the high ground of the Smoky Mountain range and dropped 30 inches of rain. Four hundred roads were closed and four million people lost power.

Regional manufacturing was also impacted, including Baxter International, the largest manufacturer of peritoneal dialysis fluids and intravenous (IV) fluids in the country. Facing a halt in production, hospitals throughout the country scrambled to purchase IV fluids to make up the difference from wherever they could find them.

"There were emergencies even here," says Reshma Ramachandran, a primary care physician and assistant professor of medicine at Yale University in New Haven, Connecticut. "We were trying to import IV fluids [from abroad] to meet demand."

But medicine shortages due to natural disasters are just the tip of the iceberg when compared with what may be on the horizon if the Trump administration moves forward on promises to impose tariffs on drugs, medical devices and drug compounds entering the United States market.

As of 2020, nearly half of all Americans reported taking a prescription drug within the past 30 days, but that figure skyrockets to 70% for those between 40 and 79 years old. Americans between 60 to 79 largely use diabetes, cholesterol and heart medications to manage numerous chronic conditions, and those are the very drugs likely to experience shortages or price increases due to potential tariffs.

Drug approval in the U.S. differs from other industrialized peers like the European Union. Drugs are approved by the Food and Drug Administration (FDA) based on safety and efficacy, and are available through insurance companies quickly after approval. Pharmaceutical and insurance companies negotiate on what to pay for a drug, and establish a contract.

"The drug company may offer a discount of 10% to 70% or 80% [to an insurer]," says Kirsten Axelsen, a life sciences consultant and non-resident fellow at the American Enterprise Institute, a center-right public policy thinktank. "That gives the insurance company more favorable access to the formulary, and the patient pays less [...] for rapid access."

In Europe, the process takes longer. Drugs are lengthier to approve, Axelsen says, because they are subject to government scrutiny since health insurance is public, and people may not be paying out of pocket for much of their care. Thus, governments often set the price that they are willing to pay a drug company.

The U.S. is a central manufacturing hub along with Europe for name brand, complex drugs that enter the market patent-protected for a few years. Generic drugs are small molecule drugs that are off-label from name brand alternates that aren't covered by patent protections, such as blood pressure and cholesterol medications. Generic drugs are more commonly manufactured in China and India.

"More than 90% of all [drug] volume is generic for 20% of the [name brand] cost," Axelsen says.

Similarly, biosimilars are generic injectable medicines, such as insulin. Biosimilars tend to be harder products to make because they mimic the human cell, so they have a higher bar to clear for FDA approval than generic drugs.

Both of these products have notoriously low margins for manufacturers because they face global production competition. For example, Ramachandran recalls a student studying the cost to produce a biosimilar insulin and found that it cost about $10 to manufacture a one-month supply. In 2022, the Inflation Reduction Act (IRA) capped the out-of-pocket cost for insulin for Medicare patients to $35 per month. Though economically helpful for diabetics, the price cap inadvertently created economic constraints that have caused numerous insulin producers to shutter since.

"The margins are quite low to the point where there's a lot of consolidation," Ramachandran says. "There's not many biosimilar manufacturers out there, so if there's no margin, they'll exit the market."

This shaky ground means that there are regular shortages of common drugs in the U.S., like antibiotics. In 2023, an outbreak of syphilis spread throughout the country because of production problems at Pfizer, the only national manufacturer of an injectable drug to treat the condition.

While it sounds like a good idea to encourage companies to produce these drugs in the U.S., convincing companies to expend hundreds of millions of dollars on manufacturing low-cost drugs is a hard sell, experts argue. And even if there were funding mechanisms to help power these facilities, other roadblocks are in the way to making more American drug production of generics and biosimilars a reality.

Opening new drug manufacturing facilities requires FDA oversight and approval. But as of April 1, 3,500 FDA staffers were expected to lose their jobs due to cuts by the Department of Government Efficiency (DOGE). Without those staffers, it will make setting up, inspecting and approving new drug manufacturing facilities take much longer, Ramachandran says.

There is also persistent confusion about how various public insurance entities in the U.S., such as the Veteran's Administration (VA), will absorb higher generic drug costs.

"There are a number of mechanisms that don't allow drug prices to go up," Axelsen says. "In the VA, you cannot raise a price more than the consumer inflation rate, or you have to pay it back."

Plus, Axelsen argues that pharmaceutical companies have been onshoring their production capabilities for years, but in the domestic biosimilar market, the problem isn't necessarily building up enough capacity to produce products: It's getting insurance companies to reimburse for them at a rate that can keep businesses afloat due to the high demand.

Ramachandran anticipates that if tariffs do move forward, IV drugs, antibiotics, insulin, insulin delivery devices and pediatric cancer drugs will experience acute national shortages. If that happens, people who need to enter hospitals for in-patient care would notice shortages of necessary medicines or products first, along with those who have very specific, rare conditions that few drugs treat.

Furthermore, Ramachandran predicts that while what older adults pay out of pocket for drugs through Medicare coverage may not change due to the $2,000 annual cap passed by the IRA, Medicare will have to make up for the higher cost of drugs from the tariffs, and it is more than likely that monthly premiums will rise for all Medicare Part D patients who use the supplemental insurance to help pay for drugs.

Beyond shortages, Axelsen says that patients should expect branded drug launch prices to be higher at the outset because pharmaceutical companies will likely bake the cost of tariffs into their product from the start. Patients may also be forced to buy more expensive name-brand medications instead of cheaper generics because those may not experience such severe shortages.

Geopolitically, Axelsen predicts that some of the ramifications for the global supply chain of drugs may tilt more favorability towards China.

"China is a growing market for drugs. They're purchasing, and we see countries outside of the U.S. manufacturing for the Chinese market," she says. "That may make them less interested in allocating capacity for drugs to the U.S. if they have tariffs. There may be more coziness for drug manufacturers outside of the U.S., and shortages within the U.S."

Older adults are in a unique position in the drug tariff conversation because they are the population that tends to take drugs the most consistently and live with multiple chronic conditions from aging.

"When a shortage occurs, seniors are the ones I hear from first in my clinic," Ramachandran says. "They take multiple generic medications for common diseases that are imported from other countries … They will be the canaries in the coal mine experiencing this issue the most and first."

There is still a significant chance that tariffs on drug imports will not go into effect. On April 16, the Industry and Security Bureau opened a public comment period that ends on May 7 for the public to share feedback on potential tariff policies. Older adults should consider submitting public comments, or reaching out to their elected representatives with their feedback.

Ramachandran recommends that older adults taking multiple generic medications for chronic disease management should visit their doctors and discuss a de-prescribing plan.

"Ask doctors if you still need this medication after so many years, or to simplify your list," she says. Seniors using a variety of daily medications need to know what they absolutely require on an everyday basis medically, and what they could go without if they needed to.

There are also drug shortage databases that older adults can check to see when their everyday drugs were last in a shortage, or what ones are currently impacted, such as the FDA Drug Shortage Database or the American Society of Health-System Pharmacists Current Drug Shortage database.

Karen Fischer is an independent writer and reporter. You can find some of her bylines at The Verge, Eater, and CQ Researcher, as well as on her website, kfischerwrites.com. She also produces The Gumbo Pot, a weekly Substack of independent reportage on education, health, culture, infrastructure, food and energy. Read More