US tariffs present dual threat for EU economy, health economists warn on pharma impact
Source: Euractiv
Greek health economists have warned that tariffs threatened by the United States will have damaging implications for Europe’s patients and the pharmaceutical industry.
President Donald Trump’s plans to impose tariffs of at least 25% on pharmaceuticals, among other imported goods, have been touted as an effort to reshore manufacturing and reduce reliance on foreign suppliers. However, the administration has said specific measures will not be presented before April.
This week, layering further confusion on a delicate situation, more goods were added to the list of exemptions from the new tariffs imposed on Canada and Mexico twice in a week.
While tariffs on cars and semiconductors are largely expected, given the recent trade policies of the US administration, as Kostas Athanassakis, assistant professor of Health Economics at the University of West Attica, told Euractiv: “For [pharmaceuticals], it feels highly extraordinary; [because they], widely acknowledged as “merit goods” have historically been excluded from trade wars due to their unquestionable impact on collective welfare.”
“The pharmaceutical sector is preparing for potentially significant upheavals in response to the announcement of new tariffs on imported commodities by US President Donald Trump,” said Professor Athanassios Vozikis of the Laboratory of Health Economics and Management at the University of Piraeus.
Vozikis told Euractiv: “The international pharmaceutical supply chain, which is assessed to exceed $900 billion, faces considerable jeopardy.”
Burden on users and payers
According to Vozikis, President Trump’s unpredictable tariff strategies have emerged as an imminent threat, “reverberating through the global pharmaceutical landscape and engendering anxiety among patients across the globe.”
“Tariffs, especially when imposed on products with inelastic demand, tend to bear consumers – in this case, insurers as well,” Athanassakis explained.
He remarked that for products with a low degree of substitutability, such as highly innovative medications, or low-margin products, including generics and biosimilars with a high degree of competition,”imposing tariffs will inevitably lead to increased user charges and pharmaceutical spending for third-party payers (insurance), at least in the short-term,”
A double threat
As Athanassakis pointed out, the policy aims to incentivize production on US soil.
However, he describes it as “a rather unreasonable policy option, considering its potential impact on consumers, the global diversification of production by international companies, and the inability to relocate business operations at such short notice, among other things.”
Furthermore, its implementation will pose a two-fold threat to the EU economy.
“On the one hand, it will attempt to drain Europe from added-value production, which is crucial for the continent in order to maintain standards of living and the welfare state, considering a demographically shrinking workforce. On the other hand, it runs counter to one of the key objectives of the EU pharmaceutical policy and legislation, which is to enhance research, development, and local production of pharmaceuticals.”
“These tariffs could precipitate substantial ramifications for the pharmaceutical sector in Europe,” Vozikis emphasised, adding, “Pharmaceutical enterprises are particularly susceptible to such changes, as a significant share of their revenue was derived from the US market in 2024.”
The response
For Vozikis, the European biopharmaceutical firms’ response to the enactment of the proposed tariffs is still uncertain “because of potential outcomes, including the repatriation of drug production and clinical research to the US or the relocation to alternative countries devoid of tariffs.”
“Apart from a negotiation process with the US to keep pharmaceuticals aside the trade war, the EU might be forced to reconsider incentives for R&D and local production,” Athanassakis remarked.
“The elements of the legislation pertaining to regulatory data protection, price competition for the generics market, or even the provisions for environmental standards, might be on the table,” he added.
Vozikis sees a potential avenue for innovation.
“Through the strategic implementation of digital technologies, the diversification of production methodologies, and the enhancement of international collaboration, the European pharmaceutical sector possesses the capacity to transform this crisis into a pivotal opportunity for establishing a more resilient and sustainable future.”
“This is not just a response to a crisis – it’s an investment in a healthier, more secure future for Europe,” he said.
[Edited by Brian Maguire]
The original article: belongs to Euractiv .
