The specter of tariffs imposed by the United States looms large over the European healthcare landscape, sparking concerns among Greek health economists about the potential ramifications for patients and the pharmaceutical industry. These proposed tariffs, initially championed by President Donald Trump, are designed to encourage the reshoring of manufacturing and diminish reliance on foreign suppliers. While specific details were anticipated in April,the ongoing uncertainty has triggered widespread anxiety within the global healthcare sector.

The Trump governance’s strategy involves levying tariffs of at least 25% on pharmaceuticals, alongside other imported goods. This initiative, intended to stimulate domestic production, has been met with apprehension by European economists who foresee adverse consequences for both patients and the pharmaceutical market. The situation is further complicated by recent adjustments to tariff exemptions for Canada and Mexico, adding to the prevailing instability.

Kostas athanassakis, assistant professor of Health Economics at the University of West Attica, emphasized the atypical nature of targeting pharmaceuticals with tariffs. For [pharmaceuticals], it feels highly extraordinary; [because they], widely acknowledged as ‘merit goods’ have historically been excluded from trade wars due to their unquestionable impact on collective welfare, Athanassakis told Euractiv.

Professor Athanassios Vozikis of the Laboratory of Health Economics and Management at the University of Piraeus echoed these concerns, stating, The pharmaceutical sector is preparing for potentially meaningful upheavals in response to the announcement of new tariffs on imported commodities by US President Donald Trump.

the potential disruption to the international pharmaceutical supply chain is significant.Vozikis noted, The international pharmaceutical supply chain, which is assessed to exceed $900 billion, faces considerable jeopardy. This disruption could translate to increased costs and restricted access to essential medications for patients throughout Europe.

Burden on Users and Payers

Vozikis emphasized the extensive repercussions of President Trump’s tariff strategies,describing them as an imminent threat,reverberating thru the global pharmaceutical landscape and engendering anxiety among patients across the globe. The unpredictable nature of these policies exacerbates the instability and concern within the healthcare sector.

athanassakis explained the economic impact of tariffs on essential goods: Tariffs, especially when imposed on products with inelastic demand, tend to bear consumers – in this case, insurers as well. This implies that the costs associated with these tariffs are likely to be passed on to patients and insurance companies, leading to higher healthcare expenses.

He further elaborated on the impact on specific types of medications: Imposing tariffs will inevitably led to increased user charges and pharmaceutical spending for third-party payers (insurance), at least in the short-term, notably for products with a low degree of substitutability, such as highly innovative medications, or low-margin products, including generics and biosimilars with a high degree of competition.

A Double Threat to the EU Economy

Athanassakis pointed out that while the policy aims to incentivize production within the United States,it presents important challenges for the European Union. He described it as a rather unreasonable policy option, considering its potential impact on consumers, the global diversification of production by international companies, and the inability to relocate business operations at such short notice, among other things.

The implementation of these tariffs poses a two-fold threat to the EU economy. Athanassakis explained that on the one hand, it will attempt to drain Europe from added-value production, which is crucial for the continent in order to maintain standards of living and the welfare state, considering a demographically shrinking workforce. Conversely, it runs counter to one of the key objectives of the EU pharmaceutical policy and legislation, which is to enhance research, growth, and local production of pharmaceuticals.

Vozikis emphasized the potential ramifications for European pharmaceutical companies, stating, These tariffs could precipitate substantial ramifications for the pharmaceutical sector in Europe. Pharmaceutical enterprises are notably susceptible to such changes, as a significant share of their revenue was derived from the US market in 2024.

The Response from europe

The response from European biopharmaceutical firms remains uncertain, according to vozikis, because of potential outcomes, including the repatriation of drug production and clinical research to the US or the relocation to alternative countries devoid of tariffs. This uncertainty underscores the complex decisions facing these companies as they navigate the evolving trade landscape.

Athanassakis suggested potential strategies for the EU, stating, Apart from a negotiation process with the US to keep pharmaceuticals aside the trade war, the EU might be forced to reconsider incentives for R&D and local production. This could involve reevaluating various aspects of pharmaceutical policy and legislation.

He further elaborated, The elements of the legislation pertaining to regulatory data protection, price competition for the generics market, or even the provisions for environmental standards, might be on the table. This indicates a willingness to consider significant changes to existing regulations to mitigate the impact of the tariffs.

Despite the challenges, Vozikis sees an prospect for innovation within the European pharmaceutical sector. Through the strategic implementation of digital technologies, the diversification of production methodologies, and the enhancement of international collaboration, the European pharmaceutical sector possesses the capacity to transform this crisis into a pivotal possibility for establishing a more resilient and sustainable future.

Vozikis concluded with an optimistic outlook: This is not just a response to a crisis – it’s an investment in a healthier, more secure future for Europe. This sentiment highlights the potential for the European pharmaceutical industry to adapt and thrive in the face of adversity.