Updated Apr 4, 2018 - Economy & Business

Trump's health care tariffs could raise drug costs

A lot of U.S. drugs are made in China. Photo: Stanislav Krasilnikov\TASS via Getty Images

There are a lot of medical products on the Trump administration’s list of candidates for the new 25% tariffs it wants to impose on China, including vaccines; insulin products; MRI machines, surgical tools and other medical devices; and a host of raw ingredients for pharmaceuticals.

Why it matters: An enormous amount of the ingredients in American pharmaceuticals are made in China. As those prices rise, the cost of drugs could rise, too — and the impact could be especially dramatic for generics.

How it works: Brand-name drugs are more expensive, in part, because their sales subsidize research and marketing. For generics, on the other hand, the physical act of making the pill is a much bigger part of the manufacturer’s costs.

Between the lines: The Trump administration is eager to show progress on reducing the cost of prescription drugs, and one of its top priories is greater competition from generics.

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