Insulin, cardiac treatments and antibiotics have flowed freely on many boundaries for decades, free from the rates in an attempt to make medicine accessible. But this could soon change.
For months, President Trump has promised to impose higher rates to pharmaceutical products as part of his plan to rearrange the global trading system and report the key manufacturing industries in the United States. This month, he said that the pharmaceutical rates could arrive in the “not too distant future”.
If they did, the move would have serious – and wildly uncertain consequences – for drugs made in the European Union.
Pharmaceutical products and chemicals are export n. 1 of the blockage in America. Among these are the successful ozemics of weight loss, cancer treatments, cardiovascular drugs and flu vaccines. Most are branded drugs that produce a great profit in the American market, with its high prices and a large number of consumers.
“These are fundamental things that keep people alive,” said Léa Aiffret, who directs international affairs for Beuc, the European consumer organization. “Puting them in the middle of a commercial war is very worrying.”
European companies could react to the rates of Mr. Trump in various ways. Some pharmaceutical companies that try to dodge the rates have already announced plans to increase production in the United States, which Trump wants. Others could decide to move the production there later.
Other companies seem to remain standing, but they could increase their prices to cover rates, increasing costs for patients. And higher prices could affect not only American consumers, but also patients in Europe. Some companies have started to argue that Europe should create more favorable conditions for their activities by dismantling some of the rules that maintain drug prices low.
Or a little middle could carry out: companies could move their financial profits to the United States for accounting purposes to avoid importing expenses, even if they leave their physical factories abroad to avoid moving costs and the challenges of having to create new supply chains.
The group of Mrs. Aiffret has already warned European officials not to risk an attack against the important industry by targeting in exchange for American drugs: Tit per Tat would have had too seriously a cost for European consumers.
But the pharmaceutical sector is complicated. Agreements with insurance companies and government agencies can make it difficult to quickly adapt prices for brand drugs, while government regulations can make movement both a challenge and a long -term commitment. The result is that nobody can safely provide the result.
“We haven't had pharmaceutical rates for a long time,” said Brad W. Setser, an economist of the Council on Foreign Relations who has studied the tax rules that encourage production abroad.
Although Mr. Trump paused his so -called “mutual” rates in favor of a rate of all 10 percent during the break, he left some specific rates in the sector and clarified that the chips and pharmaceutical products would have been the next. The United States recently started investigation in both sectors, a first step to hit them with rates.
Many experts in the sector expect the new rates to be 25 percent, in line with those on steel, aluminum and cars.
For countries in the center of the European pharmaceutical industry, the possible rates are particularly worrying. This is particularly true for Ireland, where pharmaceutical products represent 80 % of all exports to the United States.
Many pharmaceutical companies have originally transferred to Ireland because it offers very low tax rates. But it also worked to develop its pharmaceutical sector and offers access to a highly qualified workforce.
In recent years, the sector has grown rapidly. More than 90 pharmaceutical companies are now home to there, according to the direct foreign investment agency of Ireland, and many of the largest American drug producers have operations in the nation. Last year, the pharmaceutical industry in Ireland exported 58 billion euros, or about $ 66 billion, in pharmaceutical and chemical products in the United States.
“The Irish are intelligent, yes, intelligent people,” said Trump in March, while Prime Minister Micheál Martin of Ireland was visiting the White House. “You took our pharmaceutical companies and other companies,” he said. “This beautiful island of five million people had the entire American pharmaceutical industry in its sockets.”
Now, the rates could close the advantages of production there, which is the goal of Mr. Trump.
“In the United States, we no longer do our drugs,” Trump said last week by the oval office, adding that “pharmaceutical companies are in Ireland”.
Companies are already preparing. The companies havetened to export their pharmaceutical products from Ireland and in the US market before the falls of gloves, they suggest statistics.
Nor is Ireland the only affected country. Germany, Belgium, Denmark and Slovenia are also the main exporters.
“It is a huge question for Europe,” said Penny Naas, who guides a competitiveness program for the Think Tank the German Fund Marshall and has long worked on European public and business policies.
European leaders contacted both American officials and industry. In addition to the recent visit of the Irish Prime Minister to the Oval Office, the Irish Foreign Affairs Minister went to Washington to meet the Secretary for Commerce.
Ursula von der Leyen, president of the European Commission, the executive arm of the European Union, met in Brussels with the European Federation of industries and pharmaceutical associations, the group of lobby that represents the major European drug producers.
The industry is taking advantage of the moment to push the objects of the wish list, as less bureaucracy.
The European drug lobby group told Mrs. Von der Leyen that companies could move production or investments to the United States to limit their exposure to the rates of Mr. Trump, especially when faster approvals and easier access to capital make America more attractive.
At least 18 members of the group, which include Bayer, Pfizer and Merck, have planned almost 165 billion euros in investments in the European Union in the next five years. Although half could move to the United States, the Federation said. Nor is it only in that forecast.
“Pharma needs more interesting conditions to produce in Europe,” said Dorothee Brakmann, director of Pharma Deutschland, the largest German association of pharmaceutical companies.
These warnings seem to have their teeth. Some companies have started to express plans to spend more in the United States; The company Roche last week announced an American investment plan of $ 50 billion, the last of a series of such ads.
In the comment published last week, the managers of Novartis and Sanofi suggested that less regulation was not enough to stem the bleeding. They argued that “European prices controls and austerity measures reduce the attraction of its markets” and that the blockade should open the way at higher prices.
The managers of the sector also warned that the tariffs on the sector could interrupt the supply lines, compromise access to patients and dampen research and development.
“There is a reason” that the rates on medicines are set to zero, said Joaquin Duato, CEO of drug producer Johnson & Johnson, in a recent gain call. “It is because rates can create interruptions in the supply chain, leading to deficiencies.”
Mrs. Von der Leyen stressed similar concerns, warning that the rates on the pharmaceutical sector risk “the implications for interconnected supply chains globally and the availability of medicines for European and US patients”.
Pharmaceutical rates also hold another danger for the European Union.
The block tried to build its ability to produce generic drugs, which are essential from a medical point of view but much less profitable than branded products and are often made of Asia.
But if the US rates mean that generic drug producers in China and India are suddenly looking for customers outside America, it could send a flood of cheaper pills than usual to Europe.
This could make even more difficult for the European Union to establish a home manufacturing base for generics, even if the production of drugs for bait for rates towards the United States.
“We think it is likely that this will cause greater investments in the United States,” said Diederik Stadig, sectoral economist for Eng. “The European Commission must be on the ball.”