[Authored with Richard Hatzfeld]

Pharmaceuticals have been spared so far from the growing trade war between the United States and many other nations. But that run of fortune may soon be coming to an end as President Trump said recently that the United States will announce a “major” tariff on pharmaceutical imports “very shortly.” While we do not know what the delay in implementing other tariffs means for the threatened tariffs on pharmaceuticals — those on automobiles, for example, are going ahead as planned — the implications of tariffs on pharmaceuticals could have a dramatic impact on multiple areas throughout the US and global healthcare ecosystem.

Tariffs on medicines will, of course, increase prices for US patients. But, as with many other aspects of the fast-moving trade war, this one is likely to have unintended consequences as well. We think that companies should prepare now with an eye to mitigating problems and be prepared to communicate the ramifications of tariffs on health-related areas to diverse audiences, from regulators and policymakers to health providers and patients.

The most likely knock-on effect is on patents and other intellectual property (IP). The US has traditionally protected IP belonging to American companies and the global IP system by threatening trade retaliation against countries that do not respect IP. Those threats may now ring a bit hollow, especially among the countries most well-positioned to capitalize on erratic US policies on biopharma IP.

China

The semi-official Global Times reported on April 9 that China might consider “investigating the intellectual property benefits of US companies operating in China.” China has responded robustly to tariffs of 145% on most of its exports to the US. Vice-President J.D Vance’s characterisation of Chinese as “peasants” may complicate trade negotiations, making it very difficult for the Chinese government to seek conciliation instead of escalation.

As our colleagues have already pointed out, China sees a vast opportunity in the US’s exit from global health. China’s thriving biotech and life sciences sector wants to do more to supply South Asia, Africa, and Latin America. Its COVID vaccines were deployed across the world, but China is positioning its vaccines industry to meet routine and pandemic needs.

The 14th Five-Year Plan (2021–2025) explicitly prioritised biotechnology as a strategic sector for national development, aiming to position the country as a global leader in the bioeconomy by 2035. The Healthy China 2030 and Made in China 2025 initiatives have prioritised development of medical R&D and manufacturing, both in small molecules and biologicals. The government uses subsidies, financial incentives, public-private partnerships, and talent recruitment programmes to foster biotech innovation. High-tech science parks and innovation hubs have been established in regions such as Shanghai and Shenzhen to strengthen industrial capabilities. China is particularly focusing on synthetic biology, gene editing, stem cell research, brain science, and regenerative medicine.

There is an obvious synergy here. China may well relax IP protections for US-based companies, while maintaining its strengthened domestic IP regimen. At its most basic, this would allow Chinese producers to export biosimilars and generic copies of small molecules still protected by patents in the US and EU. Probably more significant would be the shortcuts it might allow Chinese developers in producing new therapeutics and vaccines that build on established American discoveries.

India

In 2022, almost half of US generic medicines came from India. New tariffs could dramatically affect the affordability of medicines within the USA.

India is, for now, not responding to tariffs of 26% on most of its other exports and is putting its hopes on a bilateral trade agreement (BTA) to be concluded by the third quarter of 2025. It may happen, but because presidential authority to conclude trade agreements has expired, the agreement would require Congressional approval and that is usually a fraught process. Absent a BTA, India will look for leverage and, to encourage a BTA’s progress, it may seek to apply pressure in the meantime. In this, India’s government has an advantage: it can leave action to India’s sophisticated civil society sector and the country’s activist courts.

India has long been on the US Priority Watch List for intellectual property (IP) protection and enforcement because of rumbling disputes over administrative and legislative issues. However, India’s generics industry has largely been forced to respect IP on medicines since the early years of this century. That could change without any provocative action by India’s government.

India has recently taken steps to expedite the approval of new treatments based on registration by stringent regulatory authorities such as the EMA and the FDA. Based on these approvals, ordinary Indians can import medicines for personal use. This probably has an untested implication for patents.

India’s Supreme Court has long held that a patent can only be valid in India if the patent holder is “working the patent” in the country; practically this means that a medicine discoverer has to have taken some reasonable steps to make its treatments accessible to Indian patients. The slow pace of approvals in India — and the option of submitting for approval later than in other countries — has meant that developers could control application of this doctrine in the past. Courts might now say that there are few good reasons for a delay in availability in the country and that failure to provide access in these circumstances could invalidate a patent.

India’s government can honestly say that it is powerless to control the courts and fairly helpless to resist activism around patents — look, for example, at the scholarship and training on India’s ever-excellent SpicyIP website. A new trade agreement with the US, when applied fully, could reinforce IP protection but, in its absence, the government can say with some justification that it would have trouble getting any new legislation on pharma IP through the two chambers of Parliament.

As with China, a more subtle threat may come from India’s emerging R&D-based vaccines and medicines industry. The job of developers is much easier if they can use the trade secrets of established rivals.

Ireland

The pharmaceutical industry may have some relief because it holds so much of its intellectual property in Ireland. This is a very sore point for the Trump Administration, but could mitigate the danger from any future moves by China, India and other countries to “investigate US intellectual property benefits”: no-one wants a trade war with the EU as well as the US.

Ireland has, however, been a laggardly partner to the pharma industry. It has been slow to adopt the EU’s United Patent Court (because doing so requires a referendum in Ireland). More seriously, it is one of the slowest countries in Europe to grant access to new medicines. This does not create a legal hazard for patent holders but it does weaken the country’s moral and public relations case, especially because Ireland’s delays are partly the result of policies that favour inefficient national generic producers.

Impact of IP threats

Weakening intellectual property may offer short-term improvements in access, but has many long-term risks.

Generics from India, in particular, are associated with much higher risks to patients than medicines produced in Europe, Israel, Jordan or North America. We don’t yet know enough about generics from China.

It is intellectual property that powers innovation. Developing new drugs is a high-risk, costly endeavour, often requiring billions of dollars and over a decade of research. Strong IP protections, such as patents, allow companies to recoup these investments by granting them exclusive rights to market their products for a defined period. This exclusivity ensures that innovators can profit from their discoveries without immediate competition from generics or imitators. Strong IP frameworks also encourage partnerships between pharmaceutical companies, universities, and research institutions and enable the sharing of expertise and resources, accelerating the development of new treatments while safeguarding proprietary knowledge.

What can companies do?

The evolving global trade outlook is changing by the day, and sometimes by the hour, so it is important to have one or more internal task forces with public affairs experts and consultants in China, India and Latin American markets with some similar dynamics — Brazil, Colombia and Mexico, in particular. Having an internal and an external perspective with clear lines of communication with expert advisors is very important in our current trade climate because different people know different things in fast-changing scenarios. There needs to be a different task force in Ireland, a country that will likely come under unaccustomed scrutiny.

Access planning may be the best mitigation for many of the risks. It is important in India for obvious reasons. It may be important in other countries as part of a response for moves by generic producers elsewhere.

Communication with policymakers and influencers matters more than ever. Policy responses will happen in a far more condensed time frame than they usually do. Having open channels may make all the difference, as well as having a tested protocol in place that allows companies to rapidly distinguish and mitigate misinformation before it influences policy direction. There are many consultancies and advisers with expertise, but it is important to include ones who have worked on intellectual property as well as trade.