The ripple effects of recent and potential pharmaceutical tariffs are sending shivers through the US healthcare system, and the workers' compensation insurance industry is no exception. Experts warn that these tariffs, essentially taxes on imported drugs and medical supplies, could significantly inflate the cost of workers' compensation coverage soon.

The US heavily relies on imported pharmaceuticals, particularly for generic drugs and active pharmaceutical ingredients. When tariffs are imposed, the cost of these essential medications increases. This directly impacts workers' compensation insurers responsible for covering injured workers' medical expenses, including prescription medications.

Several factors contribute to this potential cost surge:

Increased Drug Prices: Tariffs directly translate to higher prices for many commonly prescribed medications used in workers' compensation cases, such as pain relievers, antibiotics, and anti-inflammatory drugs.
Generic Drug Market Strain: The generic drug market, which helps keep medication costs down, already operates on thin margins. Tariffs could force some generic manufacturers to exit the market, reducing competition and potentially even higher prices for the remaining drugs.
Supply Chain Disruptions: Tariffs could disrupt the complex global pharmaceutical supply chain, potentially leading to shortages and further price increases.
Medical Device Costs: Tariffs on imported medical devices and components will also likely increase the cost of medical treatments covered by workers' compensation, including surgeries and therapies.

While some pharmaceutical exemptions have been considered, the potential for increased costs across the board is undeniable. This will likely translate to higher premiums for employers as insurance companies adjust their rates to account for these rising medical expenses.

Navigating this evolving landscape will require careful monitoring and strategic planning within the workers' compensation insurance industry. Exploring strategies to mitigate these costs, such as promoting the use of domestic suppliers where feasible and advocating for policies that ensure affordable access to necessary medications, will be crucial in the coming years.

Additional Resources

Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Pharmaceuticals and Pharmaceutical Ingredients Federal Register 04/16/2025

Will pharmaceutical tariffs achieve their goals? Brookings.edu 03/27/2025
Understanding the Tariff Impact on the Biotech and Pharmaceutical Industries grassiadvisors 04/11/2025
The impact of tariffs on the life sciences industry BakerMcKenzie 03/12/2025

Trump pharma tariff threat raises specter of shortages, price hikes The Hill 04/14/2025

Trump says ‘major’ pharmaceutical tariffs on the way Politico 04/08/2025

Recommended Citation: Gelman, Jon., Tariff Hikes: Work Comp Costs Rising? , www.gelmans.com (04/14/2025) https://workers-compensation.blogspot.com/2025/04/tariff-hikes-work-comp-costs-rising.html

Updated: 04/16/2025

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*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon Gelman 1.973.696.7900
jon@gelmans.com has represented injured workers and their families who have suffered occupational illnesses and diseases.