Concerns are growing in Australia over how a proposed U.S. tariff on pharmaceutical imports could affect programs designed to keep medicines affordable.
U.S. President Donald Trump had threatened a potentially damaging 100-percent tariff on pharmaceutical imports which was set to take effect on Wednesday but has reportedly been put on hold by the White House.
Trump had announced the measure in a social media post around a week earlier, which sent the share prices of several pharmaceutical companies tumbling, some by more than five percent.
"That was expected. You get a surprise announcement, then markets will react," said Prof. Tim Harcourt, chief economist at the University of Technology Sydney.
Among those to suffer from the market upheaval was Australian drugmaker CSL, which saw billions initially wiped from its value amid the furore over Trump's announcement. The company has much on the line, with CSL exporting the majority of Australia’s more than 2 billion dollars in pharmaceutical products to the U.S. last year.
Industry leaders have roundly condemned the tariff approach adopted by the Trump administration. "We believe in free, fair, and open trade and therefore tariffs are not the way to do that," said Elizabeth de Somer, CEO of Medicines Australia, which represents the country’s pharmaceutical research industry.
Trump’s proposed tariff did include an exemption for pharmaceutical companies that already have manufacturing facilities or are building them in the U.S., which many see as another political play by the president to appeal to his domestic base.
"It’s part of just getting manufacturing jobs back to America, it was a key election platform," said Prof. Harcourt.
Many of Australia’s major drug makers, including CSL, do have a manufacturing presence of some sort in the U.S., but with the huge financial implications at stake, the uncertainty over the tariffs is continuing to raise alarm bells.
Much of the concern centers on how the tariffs could potentially impact Australia’s Pharmaceutical Benefits Scheme (PBS), a post-World War II government program that essentially subsidizes the costs of prescription drugs, making them affordable for millions of Australians.
The scheme has long been a sore point for U.S. drug makers looking to export their goods to Australia, with many American firms said to have been frustrated over their inability to get their pharmaceutical products into Australia more quickly and, more importantly, at a higher profit.
"The pharmaceutical company lobby has always been very strong in the White House and at the moment they have a president who can cut through and obviously a very nationalist president, so they've probably taken advantage of the situation at the moment,” said Prof. Harcourt.
Australia’s government has made it clear its subsidized prescription medicine program is not up for negotiation, and has vowed to work closely with some of the country’s smaller pharmaceutical companies to ensure they can ride out what it calls unfair and unjustified tariffs.
Concerns rise in Australia over potential impact of US tariffs on pharmaceutical products
