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Trump’s 200% Pharma Tariff? Timeline, Impacts, and What Comes Next | Making Medicine Podcast · Making Medicine

• 0:00
  Speaker 1: In today's deep dive on tariffs, we're going to talk
• 0:02
  Speaker 1: about President Trump and his multi decade long love for
• 0:06
  Speaker 1: this policy that frankly, most people had turned their backs
• 0:10
  Speaker 1: on over the last century. We'll look at a timeline
• 0:12
  Speaker 1: because it's been hard to follow the headlines as it
• 0:14
  Speaker 1: relates to tariffs. And finally we'll take a look at
• 0:18
  Speaker 1: a proposed two hundred percent tariff on pharmaceuticals, a two
• 0:21
  Speaker 1: point thirty two investigation. What's that? And then we'll close
• 0:25
  Speaker 1: by seeing what's on the horizon. Hello everyone, and welcome
• 0:34
  Speaker 1: back to the Making Medicine podcast, where science, policy and
• 0:38
  Speaker 1: innovation meet. As always, I'm your host, John Stanford. Today's
• 0:43
  Speaker 1: episode is talking tariffs, a favorite topic and a timely
• 0:46
  Speaker 1: one of President Trump. But what are the implications for
• 0:49
  Speaker 1: these announcements, What do they mean and how will they
• 0:52
  Speaker 1: affect the life science ecosystem. We'll be breaking down the
• 0:55
  Speaker 1: facts and discuss what still could be on the horizon.
• 0:59
  Speaker 1: So with that, get into the show. For a long time,
• 1:02
  Speaker 1: tariffs were a third rail of international politics. We learned
• 1:06
  Speaker 1: in the nineteen twenties and thirties. They just weren't something
• 1:09
  Speaker 1: you did. Ferris Bueller's Day Off famously as a scene
• 1:12
  Speaker 1: where we all learned that tariffs just aren't great for
• 1:15
  Speaker 1: the economy. But Donald Trump doesn't believe that, and he
• 1:18
  Speaker 1: hasn't believed that for a long time. In fact, Donald
• 1:21
  Speaker 1: Trump has been a supporter of using tariffs to achieve
• 1:25
  Speaker 1: other policies since the nineteen seventies and nineteen eighties. It's
• 1:29
  Speaker 1: part of his art of the deal. So when we
• 1:32
  Speaker 1: think about President Trump and tariffs, we shouldn't think of
• 1:35
  Speaker 1: it as an economist. He thinks of a tariff as
• 1:38
  Speaker 1: being a deal maker, and certainly he is trying to
• 1:42
  Speaker 1: leverage tariff policy to address his belief that America is
• 1:46
  Speaker 1: losing to the world on a whole host of economic issues.
• 1:50
  Speaker 1: The biggest one is our trade deficit, and he'd like
• 1:54
  Speaker 1: to see tariff policy be used to more balance what
• 1:57
  Speaker 1: the US buys from other countries versus what it sells
• 2:01
  Speaker 1: to the rest of the world. One of the challenges there,
• 2:04
  Speaker 1: to be quite honest, is that while the US is
• 2:06
  Speaker 1: only home to about five percent of the world's population,
• 2:10
  Speaker 1: we're a third of the world's purchasing power, and so
• 2:13
  Speaker 1: it's going to be a challenge to try to have
• 2:16
  Speaker 1: the individuals in Lesotho buying as much from Americans as
• 2:20
  Speaker 1: Americans are buying from a small African country. But we've
• 2:23
  Speaker 1: seen that be a key driver of why President Trump
• 2:27
  Speaker 1: has taken aggressive steps and some of the steepest tariffs
• 2:30
  Speaker 1: proposed in US history. Let's break it down with a
• 2:33
  Speaker 1: little bit of a timeline of where we've been so far.
• 2:37
  Speaker 1: January twentieth, twenty twenty five, President Trump is inaugurated, and
• 2:42
  Speaker 1: tariffs are front and center about what he'll do next.
• 2:45
  Speaker 1: In February, he announced his first step, targeting the auto industry.
• 2:50
  Speaker 1: Then in March it was the steel industry. At that point,
• 2:54
  Speaker 1: pharmaceuticals and drugs seemed far off in the distance. But
• 2:58
  Speaker 1: then came Liberation Day and you probably heard about this.
• 3:02
  Speaker 1: On April second, Liberation Day, President Trump announced a ten
• 3:06
  Speaker 1: percent tariff on every country in the world. But that's
• 3:09
  Speaker 1: not what made the news. He also announced reciprocal tariffs
• 3:13
  Speaker 1: with nearly one hundred countries that were significantly higher than
• 3:17
  Speaker 1: what anyone expected. Some even got as high as one
• 3:20
  Speaker 1: hundred and fifty percent with key trading partners. Now. Following
• 3:25
  Speaker 1: that announcement and following significant market turbulence after the announcement,
• 3:31
  Speaker 1: President Trump announced a ninety day pause in which he
• 3:34
  Speaker 1: hoped countries would make deals with the United States that
• 3:37
  Speaker 1: improved the economics of our country's relationships. Throughout May and June,
• 3:42
  Speaker 1: countries did keep discussing with the US, and we saw
• 3:45
  Speaker 1: positive news out of the United Kingdom and Vietnam that
• 3:48
  Speaker 1: deals could be on the horizon. But many key deals
• 3:51
  Speaker 1: with Japan with other EU trading partners are yet to
• 3:55
  Speaker 1: come to fruition. We also had the courts engage and
• 3:58
  Speaker 1: blocked some of the tariffs temporarily, and there's been a
• 4:01
  Speaker 1: lot of discussion about just how much power one person,
• 4:04
  Speaker 1: the president has to set trade policy with the entire world.
• 4:09
  Speaker 1: But on July ninth, the ninety day pause came to
• 4:12
  Speaker 1: an end with another delay. President Trump extended his delay
• 4:16
  Speaker 1: another three weeks to August first, to allow more discussion
• 4:20
  Speaker 1: and possibly more deals. It's anyone's guess just how serious
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  Speaker 1: that timeline is. So what do these tariffs mean for
• 4:27
  Speaker 1: the pharmaceutical industry. Well, for a long time, pharmaceuticals just
• 4:31
  Speaker 1: simply weren't mentioned as part of the tariff conversation. For
• 4:35
  Speaker 1: a long time, it's been important to not put additional
• 4:38
  Speaker 1: taxes on medicines In fact, they've been exempted from most
• 4:42
  Speaker 1: tax policy around the world because people don't want to
• 4:45
  Speaker 1: increase the price of medicines for patients. How the Trump
• 4:49
  Speaker 1: administration was going to address pharmaceutical tariffs came into the
• 4:52
  Speaker 1: four over recent months, but especially in early July, when
• 4:56
  Speaker 1: President Trump floated a possible two hundred percent tariff on pharmaceuticals. Now,
• 5:03
  Speaker 1: he did, in true Trump's style layout, that it could
• 5:06
  Speaker 1: take place over a year or eighteen months. Even more recently,
• 5:10
  Speaker 1: he said those tariffs could start at a lower level
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  Speaker 1: as early as August. First, what we lack here is
• 5:16
  Speaker 1: certainty about what these pharmaceutical tariffs even are. There's a
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  Speaker 1: lot of challenge in implementing a system that would put
• 5:25
  Speaker 1: tariffs on drugs, and how it would work in practice
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  Speaker 1: is a question for all of us that frankly, we
• 5:31
  Speaker 1: don't have the answer to yet. Does it apply to
• 5:33
  Speaker 1: drugs active ingredients where they're manufactured, Does it apply to
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  Speaker 1: where products are finished or where the IP is? The
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  Speaker 1: IP location of specific drugs is also something that isn't
• 5:44
  Speaker 1: typically disclosed, so it's hard to gauge the impact on
• 5:48
  Speaker 1: individual companies, which is why, frankly, the capital markets aren't
• 5:52
  Speaker 1: making much of these announcements. President Trump's recent mention that
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  Speaker 1: August first may be a key date for tariffs on
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  Speaker 1: pharmaceuticals aligns with an ongoing investigation by the Department of
• 6:03
  Speaker 1: Commerce where they're using what is called a Section two
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  Speaker 1: thirty two investigation, which is fancy DC speak for assessing
• 6:12
  Speaker 1: whether or not national security concerns could be involved with
• 6:16
  Speaker 1: the importing or exporting of goods. So for the past
• 6:20
  Speaker 1: several months, the Commerce Department has been asking key stakeholders
• 6:24
  Speaker 1: what's going on with the importing and exporting of medicines
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  Speaker 1: and is there a national security risk to having key
• 6:30
  Speaker 1: elements of our medicine manufacturing existing overseas, potentially in adversarial countries.
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  Speaker 1: Commerce Secretary Howard Lutnik recently said that investigation is coming
• 6:42
  Speaker 1: to a close, and the culmination of that and President
• 6:45
  Speaker 1: Trump's announcement mean a possible real decision on tariffs could
• 6:50
  Speaker 1: be coming as early as next month. Incubate weight in
• 6:54
  Speaker 1: on that Section two thirty two investigation because it was
• 6:58
  Speaker 1: important to say that manufacturing during medicines is a global
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  Speaker 1: and complex process forged over decades, and we are concerned
• 7:06
  Speaker 1: that a sudden increase on the cost of medicines as
• 7:09
  Speaker 1: they enter the United States could frankly lead to patients
• 7:12
  Speaker 1: paying more at the counter. One of the goals of
• 7:15
  Speaker 1: the Trump administration is certainly to bring more pharmaceutical manufacturing domestically,
• 7:20
  Speaker 1: and companies have announced a slew of investments to make
• 7:23
  Speaker 1: that happen. But that'll happen over a decade, so it'd
• 7:27
  Speaker 1: be concerning to see tariffs implemented far swifter, and frankly,
• 7:31
  Speaker 1: the impacts and how companies respond are almost impossible to predict.
• 7:35
  Speaker 1: What we do know is that APIs active. Pharmaceutical ingredients
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  Speaker 1: come from all over the world. India's supplies almost a
• 7:44
  Speaker 1: third to the United States, Europe a fifth, and then
• 7:47
  Speaker 1: other countries, including China fill in the rest, as well
• 7:50
  Speaker 1: as a healthy supply created at home. So we'll be
• 7:53
  Speaker 1: watching closely for the output of this section two thirty
• 7:56
  Speaker 1: two investigation. If the recent months have been any guide,
• 8:00
  Speaker 1: President Trump is going to be led by instinct, and
• 8:03
  Speaker 1: his instinct is to keep taking on the pharmaceutical industry.
• 8:07
  Speaker 1: Whether or not he's using tariffs, as economists would, is
• 8:10
  Speaker 1: frankly irrelevant. Tariffs are one piece of the puzzle as
• 8:14
  Speaker 1: he continues to change policy as it relates to this industry.
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  Speaker 1: For more on that and most favored Nations, check out
• 8:20
  Speaker 1: last week's episode. Section two thirty two refers to a
• 8:24
  Speaker 1: section of the nineteen sixty two Trade Expansion Act, Section
• 8:28
  Speaker 1: two thirty two, which allows the US Department of Commerce
• 8:32
  Speaker 1: to investigate whether imports of certain goods pose a threat
• 8:35
  Speaker 1: to national security, and if they do, it enables the
• 8:39
  Speaker 1: President to impose tariffs or other trade restrictions. So what
• 8:43
  Speaker 1: does that matter for us? Because the US is at
• 8:46
  Speaker 1: a critical moment about deciding whether or not making medicines
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  Speaker 1: in our country isn't just an economic imperative, but a
• 8:54
  Speaker 1: national security one. And if it's the view of the
• 8:57
  Speaker 1: Department of Commerce that our national security is threatened by
• 9:02
  Speaker 1: APIs or finished products coming in from overseas, it gives
• 9:06
  Speaker 1: the president a wide latitude to take steps to address that.
• 9:12
  Speaker 1: It's fair to say that the industry has deep concerns
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  Speaker 1: about a proposed two hundred percent tariff, what it means
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  Speaker 1: for patients, what it means for the cost of goods,
• 9:21
  Speaker 1: and frankly, how it will be implemented in an industry
• 9:24
  Speaker 1: that has diversified across countries over many decades. But we
• 9:29
  Speaker 1: also know that President Trump is the eternal deal maker,
• 9:35
  Speaker 1: and so I think industry is trying to understand how
• 9:38
  Speaker 1: this tariff proposal also factors in to broader efforts to
• 9:42
  Speaker 1: onshore this industry that America is the world leader at
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  Speaker 1: It's clear that he and his administration want to see
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  Speaker 1: not just the brilliant development of medicines to happen here,
• 9:54
  Speaker 1: but also that their manufacturing happens here. And it's important
• 9:57
  Speaker 1: to remember that he certainly will use tariffs to push
• 10:01
  Speaker 1: other policies like that. It's hard to turn on CNBC
• 10:05
  Speaker 1: or Bloomberg and not be faced with the conversation of tariffs.
• 10:09
  Speaker 1: It's something that President Trump will continue to make a
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  Speaker 1: centerpiece of his administration. But how they'll impact the pharmaceutical industry.
• 10:19
  Speaker 1: Will this two hundred percent tariff materialize and if so,
• 10:22
  Speaker 1: when and what will the implications be? We just simply
• 10:26
  Speaker 1: still don't know. That's why we will continue to try
• 10:30
  Speaker 1: to inform folks as we hear from the President and
• 10:33
  Speaker 1: his team on what the next steps for tariffs are,
• 10:36
  Speaker 1: both on the economy and for our industry specifically. Hopefully
• 10:41
  Speaker 1: this episode has given you a little insight into where
• 10:43
  Speaker 1: things stand, but As with everything these days, it can
• 10:47
  Speaker 1: change on a dime, and so that's why we hope
• 10:50
  Speaker 1: you'll keep tuning in. Join us next week as we
• 10:52
  Speaker 1: introduce our new segment, the Press Pass, where we'll bring
• 10:55
  Speaker 1: on members of the media to share their take on
• 10:58
  Speaker 1: the headlines and what's the real story behind them. Reminder
• 11:01
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• 11:04
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• 11:10
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