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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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