AAM pushes to exclude generics from Chinese exports that will face tariffs

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AAM pushes to exclude generics from Chinese exports that will face tariffs

By Sandra Levy - 06/18/2019
Jonathan Kimball, the Association for Accessible Medicines vice president of trade and international affairs has provided comments concerning a proposed modification of action pursuant to Section 301.

In a letter to U.S. Trade Representative Robert Lighthizer, Kimball wrote, “AAM strongly supports the Office of the U.S. Trade Representative’s decision to continue excluding pharmaceuticals and certain pharmaceutical inputs from the expanded list of Chinese exports that will face tariffs when imported into the United States. Our explanation for why this continues to be the correct policy position follows:

Last year, the initial list of goods from China proposed for a 25% tariff (List 1) included finished generic pharmaceuticals and active pharmaceutical ingredients, or API for medicines. AAM opposed subjecting these products to an additional duty because such additional duties would cause disproportionate economic harm to U.S. interests, including the interests of consumers, by significantly increasing the cost of generic prescription drugs. Fortunately, finished drugs and API were removed from List 1 and they have not been proposed as part of the current list of goods (List 4). AAM appreciates that the administration continues to recognize the potential harmful impact that an increased tariff would have on efforts to reduce drug prices in the U.S. In particular, AAM would like to underscore a few key points:

• The imposition of tariffs on generic drugs, biosimilars, or their ingredients would have a perverse effect on healthcare spending in the U.S. Tariffs on generic or biosimilar medicines would increase prescription drug prices and increase the risk of drug shortages for affected medical products.

• Analysts have recognized that if a 25% tariff is imposed, it would likely have a greater impact on generic producers than their brand name counterparts because manufacturing represents a much greater proportion of generic producers’ costs. Considering that generics are 90% of the U.S. drug supply but only 23% of the overall pharmaceutical spend, such a negative impact on this industry could significantly undermine the Administration’s goal of lowering drug prices.

• Drug manufacturers are held to the same high quality and safety standards by the FDA regardless of whether pharmaceutical manufacturing takes place inside or outside the U.S.

• The imposition of tariffs on pharmaceuticals is much more likely to increase the risk of drug shortages in the U,S, that it is to result in the elimination of the actions identified in the Section 301 report.

Finally, Kimball said, "AAM recognizes that the Administration is balancing a number of important interests as it continues to press China to address the concerning acts and practices identified in the
Section 301 Report. AAM appreciates the continued recognition an additional duty on finished drugs and API would harm access to safe, effective, and affordable generic and biosimilar medians are an important and essential to improving the lives and providing savings to the U.S. healthcare systems.”