Impending Tariffs on Indian Pharmaceuticals Could Impact US Healthcare System
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The US healthcare system could be severely impacted by impending tariffs on India, which is a significant exporter of generic medicines to the US. The tariffs could render some Indian generics unviable, leading to drug shortages and exacerbating healthcare issues, particularly for the uninsured and poor in the US. To mitigate these risks, some experts suggest India should drop tariffs on pharma exports to the US, but this would require major changes to India’s trade policies.
Impending US Tariffs on Indian Pharmaceuticals Could Impact Health Care System
Next month’s planned tariffs on India could significantly affect the US healthcare system. Indian Commerce Minister Piyush Goyal’s recent unscheduled US visit aimed to negotiate a trade agreement and cushion the impact of the tariffs on India’s pharmaceutical exports.
Almost 50% of all generic medicines used in the US are from India, bringing substantial savings to the US healthcare system. Indian generics reportedly saved the US $219 billion in 2022 alone according to an IQVIA study. Given that cheaper generics constitute 9 out of 10 prescriptions in the US, India’s pharma industry is vital for US healthcare.
However, the proposed tariffs could threaten this balance. Experts warn these tariffs might render some Indian generics unviable, exacerbating healthcare issues with drug shortages. The tariffs could “worsen demand-supply imbalances” impacting the uninsured and poor the hardest, as per a BBC report.
Indian pharma companies like Sun Pharma and Cipla are concerned about the tariffs’ potential impact. Increased tariffs could jeopardize their business viability, with manufacturing relocation to the US deemed unjustifiable due to cost differences.
With the cost of raw materials for drugs increasing by 20% since Trump’s tenure due to Chinese import tariffs, the tariffs on India’s largest industrial export sector could increase the cost of both generic and specialty drugs, impacting millions of Americans.
Experts suggest India should eliminate its pharma goods tariffs, which would minimally impact the Indian economy. Veteran market expert Ajay Bagga believes “US drug exports into India are barely half a billion dollars, so the impact will be negligible.”
The Indian Pharmaceutical Alliance (IPA) also recommends zero-duty on US drug exports to avoid reciprocal levies. But, it will necessitate substantial changes to India’s trade policies.
All eyes are on the potential US-India trade deal. Mark Linscott, former assistant US trade representative, predicts “short term pain through new tariffs” but expects substantial progress towards an agreement by fall this year.
The proposed tariffs on Indian pharmaceuticals could worsen existing US healthcare challenges, such as rising costs and drug prices, making affordable healthcare even harder to access for Americans. On the other hand, the Indian pharma industry contributes significantly to India’s exports and provides livelihoods for millions of Indians.
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