Premier Responds to Administration's Section 232 Investigation into Pharmaceutical Supply Chain

Premier submitted recommendations in response to a request for comments on the Section 232 investigation that the Commerce Department launched into the pharmaceutical supply chain to determine whether it poses a threat to national security. The Administration is positioning the investigation as an initial step that will likely lead to formal announcements regarding tariffs on pharmaceuticals.

In its comments, Premier acknowledged the value that the thoughtful and targeted use of tariffs can provide to supply chain resiliency in the long-term, but underscored that material increases in tariffs on healthcare supplies coupled with rapid implementation timelines can result in unintended consequences that increase costs and shortages in the short-term. Therefore, Premier recommended that any unified trade policy on pharmaceuticals ensure that overarching supply chain resiliency goals are met while minimizing the downstream impact to patient care. Specifically, Premier urged the Department of Commerce to:

• Develop a targeted approach to tariff implementation on pharmaceuticals that considers medications deemed essential by the Food and Drug administration (FDA) and Department of Defense (DOD) separately from all other medications due to their direct impact on national security;
• Provide a slow and steady glidepath approach to tariff implementation on pharmaceuticals to help ensure that both manufacturers and healthcare providers have sufficient time to respond and adapt to new tariffs while continuing to deliver essential healthcare services effectively;
• Clarify the specific pharmaceutical categories that are or are not subject to tariffs including clear definitions for the components of drugs subject to tariffs and the intersection of drugs and their associated delivery mechanisms;
• Study the impacts of tariffs on the pharmaceutical supply chain to ensure that tariffs are meeting the end goal of spurring domestic ingenuity and identify any unintended consequences, such as increases in costs or shortages, necessitating swift remediation to prevent patient harm; and
• Augment supply chain resiliency efforts through additional mechanisms such as tax incentives supporting domestic manufacturing and the creation of trusted trade partnerships for near-shoring.