President Donald Trump’s newly announced trade agreement with the European Union may result in higher prices for many brand-name prescription drugs in the United States, including widely used medications like Ozempic and Wegovy, health policy experts say.
Under the terms of the deal revealed Sunday, a 15% tariff will be imposed on most imported goods from the EU, including pharmaceuticals. While significantly lower than the 200% tariff Trump had previously threatened on imported medications, the 15% levy is still likely to affect drug pricing.
Dr. Aaron Kesselheim, a professor of medicine at Harvard Medical School, explained that pharmaceuticals represent the fifth-largest category of U.S. imports.
A substantial portion of the active pharmaceutical ingredients (APIs) for brand-name drugs consumed in the U.S. are produced in European countries like Ireland, Germany, Italy, and Belgium. Final drug manufacturing steps, such as packaging and filling, are also frequently completed in Europe.
“Europe plays a central role in the global pharmaceutical supply chain, especially for brand-name drugs,” Kesselheim said.
For example, Novo Nordisk manufactures both Ozempic and Wegovy—used to treat diabetes and obesity—in Denmark. Botox, produced by Allergan, and Merck’s cancer treatment Keytruda are made in Ireland, though a growing share of Keytruda’s production has been relocated to the United States in recent years.
Though brand-name drugs make up just 10% of prescriptions filled in the U.S., they account for approximately 80% of total drug spending, largely due to their high price tags.
“That’s because they’re priced so high,” Kesselheim noted. “Generic statins cost mere pennies, but a single vial of Botox can cost thousands or even tens of thousands of dollars.”
According to Rena Conti, an associate professor at Boston University’s Questrom School of Business, pharmaceutical companies may choose to raise list prices to absorb the impact of the new tariffs.
“In the near term, U.S. consumers are likely to face higher out-of-pocket costs at the pharmacy counter,” Conti said. “What patients pay is directly tied to the manufacturers’ list prices.”
Whether patients will immediately notice the increase is uncertain. Kesselheim pointed out that U.S. prices for brand-name drugs are already two to three times higher than in other countries, providing pharmaceutical companies ample room to raise prices further.
While tariffs will likely affect brand-name drugs the most, generic medications are expected to remain relatively unaffected. Generics make up about 90% of all prescriptions in the U.S. and are typically sold at prices close to their production cost.
Although some generic drugs are made in Europe, the majority are produced in countries like India and China. Arthur Caplan, director of medical ethics at NYU Langone Medical Center, noted that if tariffs were to be extended to those countries, the impact on generics could become far more significant.
“There’s already concern about generic drug shortages,” Caplan said. “Generic drugs don’t yield high enough profits to attract large-scale U.S. manufacturing investments.”
A spokesperson from the Association for Accessible Medicines, which represents generic drug manufacturers, stated that the organization is still reviewing the trade agreement and assessing its potential implications.
The Pharmaceutical Research and Manufacturers of America, a key industry trade group representing brand-name drugmakers, has not yet issued a public response to the deal.
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