Pharmaceutical Industry Warns Against Forced Onshoring as Tariffs Threaten Generic and Biosimilar Efficiency
核心洞察
Pharmaceutical companies are investing in U.S. manufacturing facilities following Trump administration tariffs, but industry experts warn forced onshoring could reduce efficiency and increase drug prices.
Generics account for 90% of U.S. prescriptions with razor-thin margins, and new tariffs of 25% on Canada/Mexico imports and 10% on China could push these margins into losses.
Biosimilars have delivered over $56.2 billion in cost savings to the U.S. healthcare system over the past decade through globally optimized manufacturing and supply chains.
Over the past six months, numerous pharmaceutical companies have announced plans to invest in new U.S. manufacturing facilities within the next decade, driven by the Trump administration's sector-specific tariffs. While these "onshoring" initiatives aim to strengthen domestic manufacturing capabilities and mitigate supply disruption risks, industry experts warn that forced relocation through tariffs could undermine the efficiency that makes generic and biosimilar medicines affordable for patients.
Tariff Impact on Generic Drug Economics
The generic drug industry, which accounts for 90% of prescriptions filled in the U.S., operates on razor-thin margins and delivers medications that are cheaper and available sooner than in most other OECD countries. According to the Association for Accessible Medicines (搜索), new tariffs—25% on imports from Canada and Mexico and 10% on China—could push these already minimal margins into the red.
"Generics and biosimilars are already operating their manufacturing and supply chains to maximum efficiency with very thin margins," warns Gillian Woollett, vice president and head of regulatory strategy and policy at Samsung Bioepis (搜索). "If the government does not carefully think through supply chain policies, it may critically hurt the industry, and that ultimately devastate patients through higher prices."
Biosimilar Success Story at Risk
Biosimilars have emerged as a critical component in expanding treatment options while managing healthcare costs. These products, discounted by as much as 92% compared with reference products from launch, have delivered over $56.2 billion of cost savings for the U.S. healthcare system over the past decade. They have already contributed to improving the financial stability of hospitals and clinics seeking to manage costs.
To achieve these cost savings, biosimilar companies operate highly efficient manufacturing and supply chains spanning the globe. Every step is optimized, from sourcing raw materials to manufacturing the drug substance and drug product and packaging the final product. This includes sourcing from diverse emerging economies such as Brazil, China, India, and Israel, while maintaining primary manufacturing hubs in highly-regulated countries like the U.S., Europe, Australia, and South Korea.
Supply Chain Vulnerabilities Exposed
The overwhelming reliance on foreign pharmaceutical production has created significant vulnerabilities in the U.S. drug supply. According to the Olin Business School at Washington University in St. Louis, more than 80 of the top 100 generic medicines have no U.S.-based source for their active pharmaceutical ingredients (搜索) (APIs).
Recent events have highlighted these risks. During the COVID-19 pandemic, injectable dexamethasone saw a 610% increase in demand as an effective corticosteroid therapeutic for critically ill patients, forcing many manufacturers to backorder the drug and causing months of delays. When Hurricane Helene hit a North Carolina plant producing more than 60% of the country's intravenous and peritoneal fluid bags, products had to be diverted from Europe to the U.S.
The Biosimilar Development Crisis
The pharmaceutical industry faces an emerging crisis that could compound supply chain challenges. According to industry data, 90% of biologics facing loss of exclusivity within the next 10 years have no biosimilar in development. This "biosimilar void" threatens to eliminate the competitive pressure that keeps branded biologic prices in check.
"When cost burdens are compounded with unfavorable pricing controls and limited market share, we end up with an unsustainable environment for biosimilars," Woollett explains. "No biosimilars means that branded biologics can keep raising their prices, negatively impacting patients even if they're manufactured in the U.S."
Strategic Approaches to Domestic Manufacturing
Industry experts advocate for strategic rather than forced approaches to increasing domestic pharmaceutical manufacturing. The API Innovation Center (搜索) (APIIC), a nonprofit forming public-private partnerships between industry, academia and innovators, has made notable progress with six critical APIs currently in development, including propofol, bupivacaine and albuterol—all drugs regularly in short supply.
However, regulatory challenges remain. The 2020 Acetris Health, LLC (搜索) v United States ruling created a loophole allowing pharmaceutical products manufactured in the U.S. to qualify as "U.S.-made end products" for federal procurement purposes, even if their APIs are made abroad. This interpretation undermines investment incentives for companies willing to build or expand U.S.-based API production.
Balancing Security and Efficiency
The Trump administration has signed executive orders to hasten FDA approval processes for domestic drug manufacturing plants while simultaneously increasing fees and inspections for foreign facilities. President Trump's recent executive order to fill the Strategic Active Pharmaceutical Ingredients (搜索) Reserve offers an opportunity to accelerate domestic API production.
"We want investments that create useful redundancy, and with it supply security, not ones that create duplicative costs," Woollett emphasizes. "The pharmaceutical industry is driven by the needs and priorities of leading markets, including the U.S. It functions through private capital to enable a resilient global supply chain."
The challenge facing policymakers is creating domestic manufacturing capacity that enhances supply chain resilience without sacrificing the efficiency that has made generic and biosimilar medicines accessible to millions of American patients. As the industry navigates these competing priorities, the ultimate impact will be measured in both national security and patient access to affordable medications.