U.S. tariffs on pharmaceuticals will likely drive up costs and cause shortages of critical Canadian-made drugs, including antibiotics, antidepressants and HIV treatment, according to a new study.
Published Monday in The Journal of the American Medical Association, the effort was led by University of Toronto drug policy researcher Mina Tadrous.
“Tariffs could disrupt access to essential drugs in the U.S., especially drugs where the Canadian is the only or the most commonly used product,” said Tadrous, who is also a licensed pharmacist. “This is across the board for treatments for infections and chronic diseases.”
Some medications that are sole sourced from Canada include clinically important drugs like Ibalizumab, which is used to treat HIV infections, and Oxcarbazepine, which is used to prevent seizures.
U.S. President Donald Trump has threatened to impose 25 per cent tariffs on pharmaceuticals to boost domestic manufacturing and drive down high prices in the U.S. – a plan that could backfire, according to Tadrous’ research. While pharmaceutical products imported under the terms of North America’s USMCA trade agreement have been exempt from tariffs, that could change when a new round of U.S. trade measures come into effect on April 2.
“Tariffs could hurt both countries by increasing costs and further straining supply chains on both sides of the border,” Tadrous cautioned. “Policymakers on the Canadian side of the border are also considering counter-tariffs for pharmaceuticals. We think this sets a dangerous precedent that is counterproductive.”
Tadrous and colleagues looked at U.S. data from the fourth quarter of 2022 to the third quarter of 2023. In that time, more than 22,000 different drug products were sold in the U.S., including 411 that were manufactured in Canada. While Canadian-made pharmaceuticals only represented a small fraction of the total U.S. market – about two per cent – that still worked out to US$3 billion in sales, meaning that 25 per cent tariffs could add $750 million to costs.
“The effects may differ for brand-name and generic drugs, with high-cost brand-name drugs likely absorbing short-term cost increases, but the long-term effects remain uncertain,” the study said. “Historically, minor shifts in supply chains create shortages, particularly when manufacturers lack rapid production scalability to meet demand.”
The 22,000 individual drug products sold in the U.S. represent 3,100 unique drugs. In this context, an “individual drug product” means the various dosages, forms and brands in which a drug is available, while a “unique drug” is the overall medicine in question. For example. The unique drug ibuprofen is sold under names Advil and Motrin by different companies in several forms and dosages, which are known as “individual drug products.”
Among the unique drugs sold in the U.S., 173 (5.6 per cent) contained at least one Canadian ingredient, while 52 (1.7 per cent) depended on Canada for the majority of supply. Of these, 28 were sole sourced from Canada, 27 had history of shortages and 23 were deemed clinically important – meaning they are considered leading treatments by experts.
“Although Canada is not the largest supplier of medications to the U.S., tariffs could raise costs and strain supply chains,” the research paper concluded. “Extending tariffs to larger suppliers (e.g., China, India, Europe) could worsen the predicted effects, providing rationale for pharmaceuticals being exempt from tariffs to avoid increasing health care costs and worsening disruptions in U.S. supply.”
U.S. President Donald Trump’s reciprocal tariffs on trading partners are set to take effect on April 2, a day he has proclaimed as “Liberation Day” for American trade. CTV News will have extensive coverage across all platforms:
- CTVNews.ca will have in-depth coverage, real-time updates, and expert analysis on what the tariffs will mean for Canadians.
- CP24.com will report on any developments out of Queen’s Park and what the tariffs mean for the people of the GTHA.
- BNNBloomberg.ca will explain what this means for the business community, investors, and the market.
