By Healthesystems
In September 2025, the Trump Administration announced a 100% tariff on all prescription medications, an effort to drive down prescription drug costs and bring pharmaceutical manufacturing back to the United States. While this move has the potential to impact drug pricing and the supply chain, there are still many unknowns at this time.
We sat down with Sandy Shtab, Healthesystems VP of Industry and State Affairs, and Silvia Sacalis, VP of Clinical Services, to discuss the new policy and how drug companies are reacting, along with any possible downstream impacts for injured workers and the workers’ compensation system.
What is the Trump Administration’s new tariff policy on prescription drugs? What drugs will be impacted?
Shtab: The Trump Administration has communicated a plan to enforce up to a 100% tariff on all imported brand name, patented, and biosimilar drugs. Generic drugs could also be impacted, even if produced domestically, because many of their ingredients or the equipment to manufacture them may be sourced outside of the U.S. supply chain.
When does the policy take effect? Are there any exemptions?
Shtab: The drug tariff was initially set to take effect in late August 2025 and was then postponed until October 1, 2025. It has recently been postponed again, presumably as negotiations continue between drug makers and the Trump Administration to increase and expand drug manufacturing in the United States. Those exemptions are the clincher in the effort to prevent tariffs. Drug makers who are “building” manufacturing capacity in the United States – defined as having broken ground or engaged in active construction – or those that cut pricing-relief deals with the Trump Administration have been granted relief from the tariff on their products.
Pfizer, for instance, secured a three-year exemption by agreeing to provide 40-85% discounts on selected drugs through the new TrumpRx drug pricing portal, and to extend Medicaid Most-Favored-Nation pricing. In exchange, the company pledged $70 billion in U.S. investment. We are starting to see reports of other drug manufacturers who have agreed to price cuts on insulin and other high-cost medications, and I anticipate these negotiations will continue for the next few months.
How are pharmaceutical companies reacting to the tariff?
Sacalis: Drug manufacturers are expediting U.S. manufacturing practices to circumvent the tariffs, as well as to reduce reliance on foreign suppliers. Many companies are already moving toward building or expanding their U.S. production. These include:
- Eli Lilly, which has announced a $6.5 billion API facility in Houston and is constructing a multi-billion campus in Indiana.
- Merck, which has a $1 billion biologics site under construction in Delaware alongside a newly opened vaccine facility in North Carolina.
- Amgen, which is expanding both its Ohio and North Carolina plants, with over $1.9 billion committed.
- AbbVie, which broke ground on a $10 billion program starting with an API plant in Illinois.
- Novo Nordisk, which is mid-build on a $4.1 billion GLP-1 plant in North Carolina.
- Johnson & Johnson, which has broken ground on a $2 billion biologics site and secured $2 billion of dedicated U.S. capacity at Fujifilm Diosynth’s new North Carolina facility.
- Roche/Genentech, which is building a $700 million site in Holly Springs.
- Hikma, which has begun a $1 billion multi-state U.S. expansion.
- Celltrion, which acquired Eli Lilly’s Branchburg, NJ plant to immediately establish U.S. production.
What are the possible impacts of the tariff for patients, including injured workers?
Shtab: Hospitals, insurers, and patient advocacy groups warn that the tariffs could cause drug shortages and raise patient costs. These stakeholders are lobbying for carve-outs that would provide relief for specific categories such as life-saving oncology treatments, insulin, orphan drugs, or medications that disproportionately impact vulnerable populations.
Additional proposals include carve-outs for Medicare and Medicaid patients to shield government programs from massive budget shocks, and protections for small pharmacies to ensure they are reimbursed quickly in the event of sudden price spikes. None of these carve-outs have been formally adopted, but debate continues in both Congress and the U.S. Department of Health and Human Services.
Meanwhile, a new government-run drug pricing portal, TrumpRx, is expected to launch in early 2026 and will let patients – especially those paying cash – buy certain medications directly from manufacturers at a steep discount. Those pharmaceutical companies that offer discounts through TrumpRx can secure exemptions from the Administration’s 100% pharmaceutical import tariffs.
What are the possible impacts for the workers’ compensation system?
Shtab: Tariffs can really shake things up for everyone in the drug supply chain. They have the potential to increase acquisition costs for pharmacies. They will also stretch the budgets of payers from the Centers for Medicare and Medicaid Services (CMS) and health plans and may affect consumers as well. The only branded imports that are protected from tariffs are those from companies that negotiate a deal and could show they are boosting their U.S. manufacturing efforts. Most manufacturers have come to the table with a plan. The few who have not could find themselves unable to compete.
Thinking about the workers’ compensation system, tariffs can potentially impact the medical community and injured workers beyond drug costs. Downstream, there may be items like personal protective equipment (PPE), medical consumables, and medical equipment that are affected. All of these are necessary to the day-to-day operation of physician’s offices, hospitals, outpatient imaging centers, and physical therapy clinics.
In September 2025, the U.S. Department of Commerce initiated a national security investigation on these items and requested public comments. In response, the American Hospital Association expressed concerns, warning that potential tariffs on medical equipment could disrupt availability of critical healthcare supplies and significantly raise hospital costs.
Could the drug tariff ultimately bring about any positive changes for the workers’ comp system?
Shtab: I am optimistic that there could be a positive effect, though it may not be obvious or immediate. As drug makers ramp up their domestic manufacturing, we are likely to see job growth in this area, which will strengthen our healthcare infrastructure. Anything that helps to reduce the cost of care has the potential to improve our ability to reinvest those savings into how we deliver healthcare. So, while we may not see those benefits right away, a strong workforce and a self-sufficient supply chain could position us to take better care of injured workers – and that would be a good thing.
Sacalis: When applied to critical medical goods, components, medications, and supply chains, tariffs can deliver important strategic advantages for workers’ compensation stakeholders. Though they may increase short-term costs, they offer long-term gains in reliability, safety, and national resilience, which directly impact injured worker outcomes. Tariffs can enhance the stability, quality, and resilience of medical supply chains critical to workers’ compensation, ultimately supporting faster care delivery, fewer complications, more dependable medication and supply access, and improved return-to-work outcomes.
Here’s how the prescription drug tariff can positively impact different workers’ comp stakeholders:
Injured Workers
- Fewer care disruptions during global shortages or supply chain crises
- Higher-quality products from domestic manufacturers subject to stricter safety and performance standards
- Improved medication availability, especially for generics used frequently in workers’ comp (NSAIDs, antibiotics, muscle relaxants), thus reducing delays in treatment
- Fewer disruptions in medication regimens, supporting more consistent recovery
Providers (orthopedic surgeons, PT/OT, pain specialists, hospitals)
- More predictable supplies for surgeries and rehab, including implants, surgical tools, and rehab equipment
- Shorter turnaround times for repairs or replacements when products are domestically sourced
- Reduced cancellations or rescheduling due to unavailable equipment, preserving continuity of therapy and faster return to work
- Higher product reliability, leading to fewer complications and downstream costs
Workers’ Compensation Carriers and TPAs
- Greater cost predictability over time, reducing exposure to dramatic global price spikes that impact claim reserves
- Improved quality and reliability of devices and medications, decreasing the likelihood of complications, readmissions, or treatment failures
Employers
- Reduced downtime during supply chain disruptions, helping injured employees receive timely care and return to work sooner
- Less vulnerability to global shortages that could delay surgeries or therapies
- Stronger domestic industrial base, which supports manufacturing jobs and local economic stability
- More consistent workers’ comp premium trends, thanks to fewer supply-driven cost surges
Pharmacy Benefit Stakeholders (PBMs, pharmacies)
- More stable supply of medications, reducing delays in filling scripts
- Greater quality assurance for domestic-sourced medications used in occupational injuries
Nurse Case Managers
- Fewer delays related to unavailable equipment or supplies, making care coordination more efficient
- Improved reliability and quality of treatment plans
Sandy Shtab is VP of Industry and State Affairs at Healthesystems. She leads the Advocacy & Compliance team, which regularly tracks regulatory activity via the Regulatory Recap e-newsletter. In addition to email, the newsletter is published on the Advocacy & Compliance page of the Healthesystems website.
Silvia Sacalis, PharmD, BS is VP of Clinical Services at Healthesystems, overseeing clinical strategy, services and operations within the organization. You can learn more about Healthesystems’ Clinical Services here.
