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    Op-Ed                                                                 AUGUST 14, 2026      |  The Indian Eye 10

             Generic Drug Tariffs Could Become

                         Costliest Healthcare Mistake

               While aimed at reviving domestic manufacturing, the proposed tariffs risk increasing healthcare costs,
              disrupting supply chains, and straining one of the world’s most important pharmaceutical partnerships.

            ASHISH K SINGH                                                                                        about whether the policy aligns with
                                                                                                                  broader healthcare affordability
                   S President Donald Trump’s                                                                     goals.
                   proposal  to  impose  tariffs                                                                        Implications for India
            Uof up to 200 per cent on im-                                                                             For India, pharmaceuticals re-
            ported generic medicines from 2028                                                                    main one of its most successful ex-
            has  been presented as an industrial                                                                  port sectors. The United States is the
            policy designed to rebuild American                                                                   industry’s largest overseas market,
            pharmaceutical manufacturing. Po-                                                                     accounting for a substantial share of
            litically, it fits neatly into the broader                                                            revenues for major Indian drug man-
            “America First” agenda of encourag-                                                                   ufacturers.
            ing companies to relocate production                                                                      The immediate impact may be
            to the United States. Economically,                                                                   limited since the tariffs remain at
            however, the proposal raises serious                                                                  zero until 2028. As Mukesh Aghi has
            questions. Nowhere are those ques-                                                                    suggested, there is little reason for
            tions more relevant than in India’s                                                                   India to overreact today. Instead, In-
            pharmaceutical sector, which has be-  The COVID-19 pandemic exposed vulnerabilities in global pharmaceutical production (File photo)   dian pharmaceutical companies can
            come indispensable to the American                                                                    use the transition period to diversify
            healthcare system.                cies contain medicines manufactured   high while tariffs would substantially   export markets, expand investments
                Mukesh Aghi, President and    wholly or partly in India.        increase costs.
            CEO of the US-India Strategic Part-   The result has been enormous      Those costs would ultimately   in advanced manufacturing and,
                                                                                                                  where commercially viable, explore
            nership Forum (USISPF), perhaps   savings for the United States. Ge-  flow through multiple channels. Gov-  local manufacturing partnerships
            summed up the paradox most suc-   neric  medicines  account  for  the   ernment  healthcare  programmes   within the United States.
            cinctly. India supplies roughly 40   overwhelming majority of prescrip-  would pay more for medicines.    Indeed, several large Indian phar-
            per cent of the generic medicines   tions filled in America while repre-  Private insurers would face higher   maceutical companies already oper-
            consumed in the United States.    senting only a fraction of total drug   procurement expenses. Employers   ate manufacturing and research facil-
            Most of these  medicines are  pur-  spending. They have allowed Medi-  would likely see rising health in-  ities across North America. The tariff
            chased through government-funded   care, Medicaid, insurance compa-  surance premiums. Patients could   proposal could accelerate this trend
            programmes such as Medicare and   nies and individual patients to avoid   encounter increased out-of-pock-  rather than fundamentally alter In-
            Medicaid. If tariffs of 100 or 200 per   billions of dollars in healthcare costs   et costs, particularly for medicines   dia’s global pharmaceutical position.
            cent are imposed on these imports,   every year.                    where domestic alternatives remain    Nevertheless, smaller exporters
            the first entity forced to absorb the   Higher Tariffs, Higher Bills  unavailable.                    with fewer financial resources could
            additional cost may well be the US    Supporters of the tariff propos-   A Question of Strategy       face significant challenges if produc-
            government itself.                al argue that higher import duties    The broader economic logic also   tion relocation becomes necessary.
                That observation deserves closer
                                                                                                                      The United States has legiti-
            examination.                      will encourage companies to manu-  deserves scrutiny.               mate concerns about supply-chain
                                                                                    The generic pharmaceutical in-
                                              facture medicines domestically. In
                  India’s Invisible Role      theory, the policy seeks to reduce de-  dustry  operates  on  extremely  thin   resilience. The COVID-19 pandem-
                India today occupies a  unique   pendence on overseas suppliers and   profit margins. Many medicines cost   ic exposed vulnerabilities in global
            position in global pharmaceuticals.   improve pharmaceutical security.  only a few dollars per prescription.   pharmaceutical production and high-
            Over the past three decades, Indi-    However, pharmaceutical man-  Unlike branded medicines protect-  lighted the risks of excessive depen-
            an manufacturers have become the   ufacturing cannot be relocated over-  ed by patents, generic manufacturers   dence on concentrated manufactur-
            world’s largest suppliers of afford-  night.                        have limited pricing flexibility.  ing hubs.
            able generic medicines. Hundreds      Building compliant  production    A sudden tariff increase of 100   Yet resilience need not come at
            of manufacturing facilities approved   facilities requires billions of dollars   or 200 per cent cannot simply be   the expense of affordability.
            by the US Food and Drug Adminis-  in investment, regulatory approvals,   absorbed  by  manufacturers  indefi-  If implemented as proposed, the
            tration produce everything from an-  skilled labour and years of valida-  nitely. Some products may become   policy  could  end  up  achieving  pre-
            tibiotics and cardiovascular drugs to   tion before medicines reach phar-  commercially unviable, prompting   cisely the opposite of its intended
            cancer medicines and diabetes treat-  macy shelves. Even with the two-year   companies to withdraw from partic-  goal: higher costs for the US gov-
            ments.                            transition period announced by the   ular therapeutic segments. Reduced   ernment, higher prices for American
                For American consumers, Indi-  White House, many analysts believe   competition, in turn, could produce   patients, disruption for Indian manu-
            an generics have become almost in-  relocating a significant portion of ge-  medicine shortages and higher pric-  facturers and additional uncertainty
            visible because they are so deeply in-  neric  manufacturing  by  2028  would   es—problems the United States has   in one of the world’s most important
            tegrated into the healthcare system.   be extremely challenging.    already experienced in several drug   healthcare supply chains.
            Every day, millions of prescriptions   During this adjustment period,   categories.                       Sometimes, the cheapest medi-
            dispensed across American pharma-  import  dependence  would  remain    That raises important questions   cine is also the best economic policy.

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