Americans will feel the pain in their medicine chest when their antibiotics, vaccines, and prescriptions suddenly jump in cost by 25 per cent, said Mina Tadrous, an assistant professor at the University of Toronto’s Leslie Dan Faculty of Pharmacy
Published Feb 21, 2025 • Last updated 12 minutes ago • 4 minute read
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The looming threat of tariffs underscores an urgent need to address long-standing challenges in Canada’s pharmaceutical distribution system, said Simona Zar, senior vice-president of government affairs at the Canadian Association for Pharmacy Distribution Management. Photo by Andrew Harnik /Getty ImagesWith U.S. President Donald Trump’s tariffs targeting imported pharmaceuticals, headaches lie ahead for both American patients and Canadian companies and their workers, industry experts in Canada warn.
Americans will feel the pain in their medicine chest when their antibiotics, vaccines, and prescriptions suddenly jump in cost by 25 per cent, said Mina Tadrous, an assistant professor at the University of Toronto’s Leslie Dan Faculty of Pharmacy.
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In 2023, $9.1 billion of Canada’s $46 billion pharmaceutical products crossed the border to Canada’s largest collective pharmaceutical customer, the United States.
“They’ll be adding 25 per cent or whatever number it is, to the products that are coming from Canada, which means that the price will go up for Americans,” Tadrous said.
“So how are they going to navigate having to add those extra costs to a country that already has rising drug prices and a stretched health care system?”
A global villageThe world’s pharmacy reflects the global village.
No one country can produce its own drugs for itself, including the United States — the largest purchaser of medications in the world — where between 80 and 90 per cent of their drugs in their final dosage form (not counting the ingredients) are imported from other countries.
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Even when the U.S. put tariffs initially on China in the first Trump administration, they excluded pharmaceuticals, knowing how dependent it was on other countries to produce their drugs, Tadrous said.
“Since then, all the world is struggling with drug shortages and increased supply chain constraints, and so there’s been a push to nearshore or make drugs in friendlier countries, so you’re not reliant on one single country, knowing that even the United States couldn’t produce its own drugs for everything,” he said.
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Building a single pharmaceutical manufacturing plant can take years and can cost hundreds of millions, if not billions, of dollars, to make one drug, and the U.S. has 3,000 active drugs on its formularies.
Moving away from exemptions for health care products to actually being one of the three industries Trump is calling out makes no sense, Tadrous said.
“Can you imagine how long or how bankrupt they’ll go to try to produce all of their own drugs? It’s a policy that doesn’t make sense. It moves away from a more logical stance, which is trying to friendshore and nearshore with countries that are like-minded, that have similar and good relationships, like Canada,” he said.
“What’s going to end up happening is the U.S. is going to continue to be reliant on other countries, but they’re going to break their strategy of being able to nearshore with friendly countries.”
16 per cent of Canada’s drug supply is imported from the U.S.Employing tens of thousands of Canadians, the pharmaceutical supply chain industry is closely monitoring the potential impact of U.S. tariffs, said Simona Zar, senior vice-president of government affairs at the Canadian Association for Pharmacy Distribution Management (CAPDM).
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It’s an integrated supply chain. Some 16 per cent of Canada’s drug supply is imported from the United States. Overall, Canada imports about $30 billion a year of pharmaceuticals from around the globe.
“Canada is dependent on U.S. imports for part of the country’s drug supply, and the U.S. is an importer for pharmaceuticals that we manufacture. Tariffs will not only jeopardize our pharmaceutical exports — pharmaceutical imports may be suspended if higher costs can’t be passed on,” Zar said.
“Without room or other mechanisms to increase drug prices or distribution fees, the impact of tariffs could show itself fairly quickly in the supply chain, particularly for smaller, regional distributors who bring competition to the sector, but are hurting the most financially.”
While Canada has faced challenges in trade relations before, this is one of the more significant potential barriers to pharmaceutical imports and exports in recent years, promising uncertainty and increased operational costs, Zar said.
The looming threat of tariffs underscores an urgent need to address long-standing challenges in Canada’s pharmaceutical distribution system, which ensures timely replenishment of vital medications at hospitals and pharmacies across the country, she said.
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“The sector is operating under a controlled pricing model that has eroded the capacity of distributors to maintain reliable and equitable medication access. Over the years, distribution infrastructure has weakened due to stagnant drug prices and increasing operational costs. Without reform, the sector faces a precipice, particularly in its ability to serve rural and remote areas,” she said.
‘Some companies may choose to stop importing into Canada altogether’American tariffs on pharmaceuticals could create domestic instability by increasing importation costs, triggering price hikes and volatility in production, Zar said.
“Canada’s current drug reimbursement system lacks the agility and flexibility to handle such disruptions, risking disruptions to medication access and affordability. Small and regional distributors, already struggling, may be particularly vulnerable to these impacts,” she said.
U.S. tariffs will drive up the cost to import drugs into Canada, whether from higher manufacturing costs or a weakening Canadian dollar, Zar said.
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“Manufacturers may not be able to pass on the cost increases in our price-regulated market. Some companies may choose to stop importing into Canada altogether,” she said.
To secure Canada’s drug supply against the imminent threat of tariffs, the association is calling for a collaborative approach — government, distributors, manufacturers, and other key stakeholders — to ensure uninterrupted access to medications, especially in rural and remote communities.
jcarmichael@postmedia.com
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