Source: Blog – Alliance for American Manufacturing
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President Donald Trump has set the stage for tariffs on pharmaceutical imports with some key pieces to ease the way.
President Donald Trump’s May 12 executive order directing pharmaceutical companies to lower their prices is drawing a lot of interest, but it’s part of a larger effort that’s worth your attention.
Back in April, the Trump administration announced that it intends to pursue tariffs on imported pharmaceuticals through the national security protections of Section 232 of the Trade Expansion Act of 1962.
Then, on May 5, President Trump issued an executive order directing several federal agencies to prioritize the purchase of American-made pharmaceuticals and medical equipment. The order also calls for the development of strategies to enhance the domestic production capabilities of essential medicines and their active pharmaceutical ingredients (APIs) in order to mitigate the risks associated with over-reliance on foreign suppliers and create a more resilient supply chain.
Already, several pharmaceutical companies have responded with plans to expand their domestic production facilities, evidencing how trade action can stimulate domestic manufacturing growth.
On April 21, biotech company Roche announced that it will invest $50 billion into expanding its footprint over the next five years. The investment is expected to create more than 12,000 new jobs. The Switzerland-based company already has 13 manufacturing and 15 research and development (R&D) facilities across eight states.
Pharmaceutical company Novartis also made waves in April with its plans to invest $23 billion over five years to expand its manufacturing and R&D capabilities in the United States, enabling the company to “produce 100% of its key medicines end-to-end in the US, a significant increase from current levels.” The company expects to build seven new facilities and create nearly 1,000 new Novartis jobs and an estimated 4,000 additional U.S. jobs.
Similarly, Amgen is investing $900 million into the expansion of its Ohio manufacturing facility and follows the company’s December 2024 announcement of its plans to build a $1 billion manufacturing plant in Holly Springs, N.C., beside another production site the company already has in operation.
There’s much at stake if the U.S. fails to keep this momentum going. Though the lesson has faded from memory, America grappled with the real consequences of our eroded medical manufacturing capacity during the COVID pandemic. We were shocked by shortages of personal protective equipment, ventilators, and medicines then, but we’ll have no one to blame but ourselves if we encounter supply chain snarls of this scope when the next global emergency hits.
Analysis from the Food and Drug Administration in 2019 shows that 72% of API facilities supplying the U.S. are offshore, with 13% coming from China, a strategic adversary. Currently, the U.S. is a global leader in biotechnology innovation, but a robust domestic manufacturing network is an essential component to that success. China is working hard to overcome America’s lead in the market with strong incentives for innovation and manufacturing in the industry.
The United States must have immediate access to essential medications without the uncertainties of international supply chains. Additionally, domestic production reduces the risk of quality control issues that can arise with overseas manufacturing. By maintaining stringent standards within U.S. borders, pharmaceutical companies can guarantee the safety and efficacy of their products.
As the timeline for tariffs on pharmaceuticals tightens, companies are investing in the U.S. supply chain — a necessary move that will better equip our nation to handle health crises and global conflict.
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