Tariffs, pricing, and regs: Navigating exponential complexity

By Jay Bhatt, D.O., managing director of the Deloitte Health Institute and the Deloitte Center for Health Solutions, Deloitte Services, LP

The era of linear disruption—where policy changes tend to be incremental and predictable—appears to have shifted to exponential complexity. In response, life sciences and health care organizations may need to operate in a state of perpetual readiness as information about tariffs, drug-pricing policies, and new regulations unfolds. To help them succeed in this environment, organizations should be strategically ambidextrous and culturally hyper-adaptive—capable of pivoting quickly and innovating across multiple fronts.

I recently moderated a webinar that looked at the impacts tariffs, drug pricing, and regulations could have on life sciences and health care organizations, based on results from the Deloitte Center for Health Solutions’ 2025 Tariffs, Pricing, and Taxes Survey. My colleague, and Deloitte’s health care regulatory leader, Anne Phelps, said she couldn’t recall a time in her career when so much information came out of Washington, D.C. so quickly. (See a replay of the webinar here: Tariffs, pricing, and tax policies: Considerations for the health care industry.)

Since the beginning of the year, the Trump administration has pursued a wide array of policy levers—including global trade agreements, tariffs, executive orders, and regulatory changes—focused on reducing prescription drug costs, boosting domestic manufacturing, and strengthening the pharmaceutical supply chain.¹ My colleague, Brian Corvino, Global Market Access Practice leader at Deloitte, pointed out that implications and strategies will likely vary among companies depending on their size and the type of products they produce (e.g., branded-drug manufacturers versus generic-drug manufactures and large, multinational manufacturers versus smaller or emerging companies). Moreover, changes to drug policy and drug pricing are also likely to impact health plans, which pay for the drugs; and hospitals, health systems, and physician offices that administer them.

While future tariffs might apply to finished pharmaceutical products, they also can impact chemicals used to make the drugs, or devices used to administer them, such as syringes, noted Theresa Walker, tax specialist leader, Deloitte Tax LLP. She said stakeholders should consider the impact tariffs could have on every product in their portfolio. Even if the dollar value of a tariff seems small, compliance is not optional, she said. Pharmaceutical importers must meet detailed data reporting requirements for products and file with US Customs and Border Protection. The US Food & Drug Administration also plays a critical role in regulating these imports, potentially adding another layer of compliance.²

Key policy levers
About 60% of life sciences and health care leaders expect tariffs and/or pricing policies to have at least “some impact” on their businesses, according to the Deloitte Center for Health Solutions’ 2025 Tariffs, Pricing, and Taxes Survey. Here is a look at the policy levers that could have the biggest impact on drug prices and industry stakeholders:

• Section 232 investigations: Section 232 of the Trade Expansion Act of 1962 grants the president the authority to adjust imports if an investigation determines there is a threat to national security.³ Actions could include tariffs or quotas. In April, the Department of Commerce launched a Section 232 pharmaceutical investigation into foreign-sourced drugs and their ingredients, aiming to identify vulnerabilities that could lead to supply chain disruptions or price hikes. The scope of the investigation includes both pharmaceutical products and active pharmaceutical ingredients. If foreign supply chains are found to pose a national security threat, the administration could impose tariffs, import quotas, and other trade restrictions.⁴ However, such a response could impact drug prices. There also could be implications for medical device manufacturers under a pending 232 investigation into semiconductors that could be integrated into medical devices.⁵ While pharmaceuticals are exempt from a separate set of reciprocal tariffs on trading partners, medical devices are not excluded. An executive order issued September 5 modifies the list of products excluded from reciprocal tariffs.⁶
• The Inflation Reduction Act (IRA): It has been two years since the Centers for Medicare and Medicaid (CMS) identified the first high-cost drugs subject to price negotiation under the IRA, a law that has implications for emerging drug policy.⁷ Under the law, federal regulators have the ability to negotiate directly with pharmaceutical manufacturers around prescription drug prices under Medicare Part D and Part B (prescription drugs administered by physicians or clinicians). Initial price applicability year (IPAY) 2026 is a list of the first 10 negotiated drugs that will be implemented in 2026. Negotiated prices currently apply only to Medicare Part D. IPAY 2028 drugs, which will be negotiated next year, will likely expand into Part B drugs, which could introduce a new level of complexity.⁸ These are often medically complex drugs, such as injectables or infusion drugs, that generally need to be administered onsite. Along with considering pricing, the administration is also expected to consider where the drugs are administered. Administering a drug in a hospital is typically more expensive than in a doctor’s office.
• Most Favored Nation (MFN) drug pricing: The MFN policy seeks to reduce domestic drug prices by linking them to the lowest prices offered in other developed countries, specifically Organization for Economic Co-operation and Development (OECD) member countries, of which there are about 40. US drug prices are often three to five times higher than prices abroad, even after accounting for discounts manufacturers provide in the US, according to a prepared statement from the White House.⁹ On May 12, the president signed an executive order that outlined MFN pricing, along with other strategies, that could bring American drug prices in line with those paid by other nations.¹⁰ The MFN target price is the lowest price in an OECD country with a GDP per capita of at least 60% of the US GDP per capita.¹¹
• The 340B drug-pricing program: This 30-year-old program requires pharmaceutical manufacturers to sell outpatient drugs at a discount to eligible entities that serve low-income and uninsured patients. The administration is looking into ways to restructure the payment model. Proposed regulations are being reviewed. They could be finalized before the end of the year and go into effect in 2026 for IPAY 26 selected drugs.¹²

Conclusion
Tariffs, policies, and pricing are expected to remain in flux through 2026, with changes potentially extending into 2027. A number of proposed regulations could further impact drug manufacturing and the supply chain. Brian noted that the shifting landscape appears to have led to an “intersection of worlds” and a need for company executives to strengthen existing connections and or forge new ones in areas where connections might not have existed in the past. Our panelists suggested that policy in one area is likely to impact stakeholders across the industry and that organizations should consider working together across functions with agility. They may eventually evolve their organizational structure and operations to be proactive and responsive. The administration’s focus on bringing more pharmaceutical manufacturing to the US and ensuring the safety and security of the supply chain underscores the interconnectedness of health care, trade, and security.

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Endnotes:

¹Administration modifies scope of reciprocal tariffs, White House press release, September 5, 2025; Why pharma stocks are breathing easy, Investor’s Business Daily, August 22, 2025
²Trump tasks FDA in exec order to boost US drug manufacturing, Fierce Pharma, May 6, 2025
³Section 232 Investigations: Overview and issues for Congress, Congressional Research Service, November 21, 2018
⁴Notice of Request for Public Comments on Section 232 (imports of pharmaceuticals and ingredients), Federal Register, April 16, 2025
⁵US semiconductor import probe looms over medtech industry, Medtech Dive, May 6, 2025
⁶Executive order modifies scope of reciprocal tariffs, White House Fact Sheet, September 5, 2025
⁷FAQs about the Inflation Reduction Act’s Medicare drug price negotiation program, Kaiser Family Foundation, January 23, 2025
⁸Medicare prices negotiated for 2026, HHS Office of the Assistant Secretary for Planning and Evaluation, August 15, 2024
⁹White House Fact Sheet on prescription drug prices, July 31, 2025
¹⁰Delivering MFG drug pricing to American patients, White House press release, May 12, 2025
¹¹HHS, CMS set MFN pricing targets, HHS press release, May 20, 2025
¹²340B Drug Pricing Program, Health Resources & Services Administration

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