Recent proposals for a 100% tariff on imported branded and patented pharmaceuticals will likely increase costs for Express Scripts by raising the acquisition price of dr-gs it manages.
As a pharmacy benefit manager (PBM), Express Scripts' business model depends on managing dr-g costs for its clients, and the tariff would disrupt its negotiations and supply chain.
The specifics of the tariff proposal, announced by former President Donald Trump in late September 2025, suggest the following potential effects on Express Scripts:
Higher dr-g costs: Express Scripts' profitability comes from its ability to negotiate rebates and discounts with dr-g manufacturers. The tariff on imported patented dr-gs would significantly raise the base price for many brand-name medications, potentially undermining or negating any savings the PBM can achieve.
Negotiation challenges: The tariff could dramatically alter Express Scripts' negotiating power with foreign pharmaceutical companies. While some large manufacturers may absorb the costs in the short term, they would likely seek to pass increases to PBMs and insurers over time, which would then affect their clients' premiums.
Supply chain disruption: The pharmaceutical supply chain is complex and global, and a 100% tariff could cause major disruptions, especially for specialized or critical medications. A dr-g shortage, exacerbated by a tariff, could force Express Scripts to direct patients toward more expensive alternative medications, further increasing costs.
Reduced competition: Generic dr-gs are excluded from the tariff, but the cost for generics could also increase, as manufacturers with thin profit margins may exit the U.S. market rather than pay the new import tax. This reduced competition could also remove a tool Express Scripts uses to keep costs down.
Uncertainty and potential for industry adaptation: The full impact is not yet clear. The tariff includes an exception for companies that are building manufacturing plants in the U.S., which has already prompted some manufacturers to announce domestic investments. If many manufacturers adapt, the long-term impact on Express Scripts could be different from the immediate, short-term price shock. The PBM will have to adapt its strategies to address these changes.
For Express Scripts, this situation creates significant risk by driving up the very costs it is designed to manage. How it adapts will depend on the final implementation of the tariffs, the response of pharmaceutical manufacturers, and the extent to which higher costs are ultimately passed on to its clients and consumers.