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Lobby groups say tariffs could lead to drug shortages

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Cancer and heart medicines, antibiotics come from China

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Pharmaceuticals have often been exempt from tariffs

By Michael Erman, Patrick Wingrove

Feb 6 (Reuters) - President Donald Trump is facing

pressure from U.S. hospitals and generic drugmakers to exempt

medical goods from his new tariffs on Chinese imports, as they

join big pharma lobbyists who have said such trade barriers will

cause shortages of medicines and higher prices in the United

States.

The Republican president on Tuesday imposed the 10% tariffs on

all Chinese goods imported to the United States, and China

responded with its own targeted tariffs. Trump suspended a

threat of 25% tariffs on goods from Mexico and Canada, agreeing

to a 30-day pause after speaking with the leaders of those

countries. Trump has set the European Union as his next target.

The American Hospital Association wrote in a letter to Trump

on Tuesday that the tariffs will affect cancer and heart

medicines as well as antibiotics like amoxicillin from China.

Since 1994, the United States and its major trading partners

have agreed to reciprocal tariff elimination for pharmaceutical

products and chemicals used in drug production, according to the

U.S. Trade Representative's office.

In the weeks leading up to the sanctions announcement, four

lobbyists and one pharmaceutical executive who spoke to Reuters

on the condition of anonymity said they had pressed the Trump

administration for assurances that their products would be

excluded from any tariffs.

The White House did not immediately respond to a request for

comment.

A White House official told Reuters before the tariffs were

announced that any exemptions would be "few and far between."

Nearly 30% of raw ingredients used to make critical drugs

come from China, according to the hospital lobbying group, which

represents almost 5,000 U.S. hospitals and healthcare systems. A

third of disposable face masks and nearly all plastic gloves

used in healthcare also come from China, it said.

"Despite ongoing efforts to build the domestic supply chain,

the U.S. healthcare system relies significantly on international

sources," it wrote in the letter to Trump.

The Association for Accessible Medicines, a generic

medicines lobby group, said it too was asking the administration

to provide an exemption, citing the tight profit margins makers

of low-cost medicines face and the history of drug shortages.

"Imposing tariffs on generics risks simply compounding that

problem, because there is limited opportunity for generics to

absorb those costs," said Craig Burton, the group's senior vice

president of policy.

Medicines cost more in the United States than any other

country. The United States imported more than $176 billion of

pharmaceutical products from overseas in 2023, close to $6

billion of which came from China, according to U.S. trade data.

That includes antibiotics including amoxicillin and penicillin,

according to a U.S. Food and Drug Administration database.

Top executives at big branded drugmakers including Merck ( MRK )

, Amgen ( AMGN ) and Bristol-Myers said this week

the impact of the 10% China tariffs on them would not be

significant.

Ireland accounts for $41 billion worth of drug imports to

the United States, according to the U.S. Trade Representative's

office. Germany and Switzerland are also top exporters to the

United States.

U.S. tariffs on Europe, which has become a base of

manufacturing for complex biologic drugs, would be more alarming

for the world's big pharmaceutical companies, Morningstar

analyst Karen Andersen said.

"It is true that there are a lot of branded drug companies

that source active ingredients from China, but when you think

about the bigger, foundational blockbuster products, most of

those are made either in-house or by partners in the U.S. or

Europe," Andersen said.

"As part of the (regulatory) process, manufacturing sites

have to be approved, and all the test batches have to be

monitored for consistency of active ingredient and shelf life.

Moving all of that to the U.S. will just take time," UBS

pharmaceuticals analyst Trung Huynh added.

It can take five to 10 years to build a new pharmaceutical

plant and get it compliant with U.S. regulatory requirements,

according to pharmaceutical lobbying group PhRMA.