Insulin, heart treatments and antibiotics have been freely flowing to many borders for decades, have been exempt from invoices in an effort to make the drug accessible. But that could soon be changed.
For months, President Trump promises to impose higher tariffs on pharmaceuticals as part of his plan to rearrange the global trade system and bring the basic manufacturing industries back to the United States. This month, he said that pharmaceutical tariffs could come to the “not too distant future”.
If they do, the move would have serious – and wild uncertain – consequences for the drugs made in the European Union.
Pharmaceuticals and chemicals are the export No. 1 to the Bloc to America. Among them are ozempic, cancer treatments, cardiovascular drugs and influenza vaccines. Most are drugs with the name that yield a large profit to the US market, with high prices and the huge number of consumers.
“These are critical things that keep people alive,” said Léa Auffret, who is headed by the international affairs of Beuc, the European Consumer Organization. “Their placement in the middle of a trade war is particularly concerned.”
European companies could react to Mr Trump’s invoices in various ways. Some pharmaceutical companies trying to avoid tariffs have already announced plans to increase production in the United States, which Mr Trump wants. Others could decide to move the production there later.
Other companies seem to remain, but they could increase their prices to cover invoices by pushing the costs for patients. And the highest prices could affect not only American consumers but also patients in Europe. Some companies have begun to argue that Europe should create more favorable conditions for their businesses, disassembling some of the rules that maintain drug prices.
Or they could play some medium ground: Companies may shift their financial profits in the United States for accounting purposes to avoid import charges, even when they leave their physical factories abroad to avoid moving and challenging costs.
Ms Auffret team has already warned European officials that they should not hit back in an attack on the major industry with US drug tariffs in return: Tit for Tat will come at a very serious cost for European consumers.
But the pharmaceutical sector is complicated. Agreements with insurance companies and government agencies can find it difficult to adapt rapidly to branded drug prices, while government regulations can move both the challenge and the long -term commitment. The conclusion is that no one can predict the result with certainty.
“We have not invoiced medicinal products in a very long time,” said Brad W. Setser, an economist at the Council on Foreign Relations, who has closely studying tax rules that encourage production abroad.
Even when Mr Trump has stopped the so -called “mutual” invoices in favor of a total of 10 percent during the pause, he has left some special industry invoices in his place and made it clear that computer brands and medicinal products will be next. The United States has recently begun research in both areas, a first step towards their prices.
Many industry experts expect that new invoices could be 25 percent, according to those with steel, aluminum and cars.
For countries at the heart of Europe’s drug industry, possible invoices are particularly alarming. This is especially true for Ireland, where pharmaceuticals make up 80 % of all exports to the United States.
Many drug companies were initially transferred to Ireland because they offer a very low tax rate. But she also worked to develop her pharmaceutical industry and offers access to a specialized workforce.
In recent years, the sector has increased quickly. More than 90 pharmaceutical companies are now based there, according to the Ireland’s other foreign investment service and many of the largest American pharmacists have businesses in the nation. Last year, Ireland’s pharmaceutical industry exported € 58 billion, or about $ 66 billion, in pharmaceutical and chemicals in the United States.
“The Irish are smart, yes, smart people,” Trump said in March, while Prime Minister Micheál Martin of Ireland visited the White House. “You got our pharmaceutical companies and other companies,” he said. “This beautiful island of five million people has taken the entire US pharmaceutical industry in its passes.”
Now, invoices could be removed from the benefits of construction there – which is the goal of Mr Trump.
“In the US, we no longer do our own medicines,” Trump said last week from Oval Office, adding that “drug companies are in Ireland”.
Businesses are already stupid. Companies are in a hurry to export their medicinal products from Ireland and to the US market before Gauntlet Falls, according to statistics.
Nor is Ireland affected the only country. Germany, Belgium, Denmark and Slovenia are also important exporters.
“It’s a huge issue for Europe,” said Penny Naas, who is leading a competitiveness program for the Think Tank the German Marshall Fund and has long worked on European public policy and corporate affairs.
European leaders have approached both US officials and industry. In addition to the recent visit of the Prime Minister of the Irish Prime Minister to the Oval Office, Ireland’s Foreign Minister traveled to Washington to meet with trade secretary.
Ursula von der Leyen, chairman of the European Commission, an executive arm of the European Union, met in Brussels with the European Federation of Pharmaceuticals and Clubs, the Lobby Group representing Europe’s largest pharmacists.
The industry is taking the moment to promote the objects of the desire list, such as the least bureaucracy.
The Lobby Lobby Group told Ms Von der Leyen that companies could shift production or investment to the United States to limit their exposure to Mr Trump’s invoices, especially when faster approvals and easier access to capital make America more attractive.
At least 18 members of the team, which include Bayer, Pfizer and Merck, have planned nearly € 165 billion in investments in the European Union in the next five years. As long as half of it could move to the United States, the federation said. Nor is it only in this prediction.
“Pharma needs more attractive conditions to produce Europe,” said Dorothee Brakmann, director of Pharma Deutschland, Germany’s largest pharmaceutical association.
Such warnings seem to have teeth. Some companies have begun planning plans to spend more in the United States. Roche last week announced a $ 50 billion US investment plan, the last one in a number of such announcements.
In the comment released last week, Novartis and Sanofi executives suggested that the least arrangement was not enough to stop the bleeding. They claimed that “European price checks and austerity measures reduce the attractiveness of its markets” and that the block must pave the way for higher prices.
Industry executives also warned that invoices in the sector could disrupt supply lines, reduce patient access and reduce research and growth.
“There is a reason” that drug invoices are set at zero, said Joaquin Duato, chief executive of Drugmaker Johnson & Johnson, on a recent profit call. “It’s because invoices can cause disorders in the supply chain, leading to deficiencies.”
Ms Von der Leyen has underlined similar concerns, warning that the risk of the risk of the pharmaceutical sector “the consequences for the consequences for the worldwide interconnected supply chains and the availability of medicines for both Europeans and Americans”.
Pharmaceutical tariffs also have another risk for the European Union.
The block is trying to develop its ability to manufacture generic medicines, which are medically essential but much less profitable than the brand brand products and are often manufactured in Asia.
But if US invoices mean that general drug manufacturers in China and India are suddenly looking for customers outside America, it could send a flood of cheaper than ordinary pills to Europe.
This could make it even more difficult for the European Union to create a domestic production base for generic production, even when lure lure lure-brand brand brand in the United States.
“We believe it is likely that this will cause increased investment in the US,” said Diederik Stadig, an economist at ING. “The European Commission must be on the ball.”
