On April 8, 2025, President Trump announced that his administration would soon introduce “major” tariffs on pharmaceutical products, adding to the tariffs already imposed on a wide range of goods entering the United States. This move has created uncertainty within the pharmaceutical industry, including independent pharmacies and their patients.
The potential impact of the 2025 pharmaceutical tariffs
Until recently, pharmaceutical companies were exempt from tariffs imposed by the Trump administration. However, that shifted on April 8, when President Trump signaled plans to impose substantial duties on pharmaceutical imports, including both active pharmaceutical ingredients (APIs) and finished drugs. The pharmaceutical industry is uniquely vulnerable to tariffs because up to 80% of active pharmaceutical ingredients (APIs) used in U.S. drugs come from abroad, particularly from countries like India and China. Over-the-counter medications, generic drugs, vitamins, medical supplies, and even packaging materials are also commonly imported.
With about 66% of all U.S. adults taking prescription medications, and nearly 90% of those prescriptions being for generic drugs – these tariffs can have the potential to make a significant impact on both the price and availability of medications that many Americans rely on.
2025 Tariffs vs. Smoot-Hawley: What pharmacy owners should know
Back in 1930, the U.S. passed the Smoot-Hawley Tariff Act, which raised taxes on thousands of imported goods. The goal was to protect American businesses during the Great Depression—but it is often cited for contributing to a decline in international trade and worsening the economic downturn.
Fast forward to today: the Trump administration is considering a new wave of tariffs for 2025. These aren’t as broad as Smoot-Hawley, but they could still have a big impact—especially on the pharmaceutical sector. Imports of key items like active pharmaceutical ingredients (APIs) and finished medications are in the spotlight.
While the context is very different from the 1930s, the takeaway is similar: tariffs like these can have long-lasting effects on pricing, supply chains, and how businesses—like independent pharmacies—operate.
Taking proactive measures to prepare for the tariffs
With potential tariffs on the horizon, now is the time for independent pharmacy owners to take proactive steps to prepare. Getting ahead of these changes can help safeguard your business, keep patient trust strong, and ensure smoother operations during uncertain times. Below, we’ll explore a few practical actions you can take to position your pharmacy for success.
Stock up strategically
If your suppliers allow for bulk ordering at today’s prices, it may be beneficial to build up inventory of essential medications and high-demand products before prices rise. Be sure to factor in expiration dates, expenses, etc.
Work with your wholesaler to gain as much insight as possible into upcoming cost changes. Suppliers may offer flexible contracts or tiered pricing models that can help you budget more effectively.
Strengthen supplier relationships
Now more than ever, build closer partnerships with your distributors. Explore whether they offer domestic alternatives or have secondary sourcing options in case imports are delayed or too costly.
If your current wholesaler can’t support your needs, consider diversifying your supplier base.
Adjust pricing mindfully
Figuring out how to best adjust pharmacy prices for customers will be a delicate balance. Transparent communication is critical. Let your patients know why costs may be increasing and what you’re doing to best serve them during this time.
Consider offering discount programs, loyalty perks, or bundled pricing to cushion the impact for your customers. Also, evaluate reimbursement rates from insurers and pharmacy benefit managers (PBMs) to ensure you’re aware of all finances.
Compound alternatives
If possible, offer compounded medications as alternatives to tariff-impacted products. Compounding not only adds value but also highlights your pharmacy’s focus on patient care within the community.
Stay informed, stay nimble
Keep a close eye on industry updates, seek guidance from legal and financial professionals, and stay flexible in how you run your pharmacy. Independent pharmacies have long succeeded by leaning on adaptability, strong community ties, and exceptional service.
With thoughtful preparation, you’ll be well-positioned to overcome these challenges and remain a trusted healthcare resource in your community.
In conclusion…
Although the future may bring challenges, independent pharmacy owners are well-equipped to adapt and thrive. Taking proactive steps now, such as reinforcing supplier partnerships, optimizing inventory, and keeping patients informed, can help safeguard your business and maintain high-quality care. With the right planning and a flexible mindset, your pharmacy can navigate these changes with confidence.
