Pharma companies seek tariff exemptions for medical goods

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Pharmaceutical companies are concerned about potential tariffs on medical goods due to ongoing trade disputes between the U.S. and the European Union. They are urging officials from both sides to exclude medicines from these tariffs to avoid price increases on popular drugs. This includes treatments like Novo Nordisk's Wegovy for weight loss and Merck's cancer drug Keytruda. Executives from the pharmaceutical industry have communicated to U.S. officials that tariffs could lead to higher drug costs, making it more difficult for patients to access necessary medications. They emphasize that this could undermine U.S. efforts to reduce drug prices and improve public health. Some drugmakers are even considering expanding manufacturing in the U.S. but are asking for tax breaks and other support to make this feasible. Historically, pharmaceutical products have been kept out of trade disputes due to their critical importance. However, rising tensions in U.S.-China trade relations have led to fears that medicines could soon be included in tariffs. Most of the medicine supplies coming from China are of low value, but the U.S. relies heavily on high-revenue drugs produced in Europe. Novo Nordisk recently said tariffs would have a short-term impact on its business, though they are taking steps to increase production within the U.S. Merck and AbbVie, two other major drug companies, have not commented on their manufacturing locations or potential tariffs. Concerns about rising drug prices come as the U.S. government spends heavily on medications for Medicare and Medicaid. Analysts note that what once seemed unlikely—tariffs on prescription drugs—is now a frequent topic of discussion among investors. The U.S. government has previously delayed or suspended tariffs after announcing them, leaving many in the industry uncertain about future trade policies. The COVID-19 pandemic has also highlighted the dependency on foreign countries for medical supplies, prompting many companies to reconsider their supply chains. Some, like Eli Lilly, are planning new U.S. manufacturing sites, but establishing these facilities is costly and time-consuming. A key concern remains that shifting production entirely to the U.S. could divert funds from important drug research and development, as industry leaders believe that current systems are effective.


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