Vizient Warns That Proposed Tariffs Could Result in Higher Drug Prices

Vizient, a healthcare performance improvement company, recently voiced its concerns to the Office of the United States Trade Representative (USTR) about proposed tariffs on Chinese products.

The original list of products affected by the tariffs, published last month by the USTR, comprised more than 1300 Chinese products worth about $50 billion each year. Included in the list were key ingredients used by drug makers to produce products including insulin, epinephrine, antibiotics, vaccines, and immunological products, as well as some medical devices.

However, China and the United States are currently in negotiations with regard to the tariffs. Despite the fact that talks are continuing, the White House said yesterday that it will be releasing a revised list of products affected by the potential tariffs on June 15, 2018, and that will begin imposing the tariffs “shortly thereafter.”

According to Vizient’s letter, while well-intentioned, USTR’s proposals could inadvertently impact the healthcare industry and the supply chain, because China is a major provider of raw ingredients that US drugmakers need.

Jody Hatcher, MBA, president of sourcing and collaboration services for Vizient, told The Center for Biosimilars^® in an email, “Our current concern is focused on both component parts (eg, for medical devices) and on various raw materials (eg, ingredients for drugs such as insulin, epinephrine, and vaccines), as well as other critical patient care products.”

Added Hatcher, “The hospitals we serve already face immense pressure to care for a growing population amid rising prices, tight resources, and thin margins. We are concerned that the USTR proposals could result in higher prices for products and services being paid by providers, patients, and all American taxpayers; and more importantly, these challenges to affordability and accessibility could potentially negatively impact patient care…We encourage the USTR to work with other healthcare industry stakeholders—especially providers—to take steps to ensure that the proposed tariffs do not adversely impact the healthcare industry,” said Hatcher.

In addition to the tariffs, the White House has also said that it will announce investment restrictions and enhanced export controls on Chinese individuals and entities to prevent the acquisition of American technology. These restrictions are set to be announced by June 30, 2018.