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MGMA 2025

1rem

Authors

 on imported medical goods has significant implications for the health care sector, affecting everything from the cost and 

 to the financial stability of health care institutions.

On April 2, President Donald J. Trump announced global tariffs of 10% and "reciprocal" tariffs of variable amounts on select countries. Tariffs on goods from China, for example, add up to 54%. Global stock markets have declined as a result as nations, businesses and consumers wait to see what it all means for the global economy, supply chains, and more.

In March, leaders of the health care sector and across other industries were awaiting action from the White House on potential tariffs imposed on goods imported from Canada, Mexico and China. By mid-afternoon, President Donald J. Trump confirmed his Feb. 1 announcement to implement of a 25% additional tariff on imports from Canada and Mexico and an additional 10% tariff on Chinese goods entering the United States. Energy resources form Canada were to have a lower 10% tariff, according to 

. The tariffs were to go into effect on March 4 and the president said there was 

The added costs to imported goods are meant to address an emergency situation. The president claimed the authority under the International Emergency Economic Powers Act (IEEPA) to stem the flow of illegal immigrants and drugs, including the deadly drug fentanyl that has contributed to the death rate of the U.S. opioid epidemic. China, Canada and Mexico have not been accountable to their promises of halting illegal immigration and the importation of deadly narcotics, according to the White House.

The health care sector has been a major player in helping those affected by opioid addiction. Apart from the opioid crisis, imposition of tariffs on imported medical goods has significant implications for the U.S. health care system, affecting everything from the cost and availability of medications to the financial stability of health care institutions. Understanding these impacts is crucial for physicians, as they directly influence patient care and the operational dynamics of medical practices.

The American Hospital Association (AHA) has stated current and proposed tariffs could jeopardize the availability of medications and devices that patients use. AHA President and CEO Rick Pollack wrote to the president expressing concerns.

“We ask that you consider granting exceptions to the current and proposed tariffs for medical devices and pharmaceuticals made in Mexico, Canada and China that are essential to the provision of safe, effective care in America's hospitals, clinics, and other settings,” Pollack 

 to the president. “It is especially critical to have these exceptions for products already in shortage and for which production in the countries subject to increased tariffs supply a significant part of the U.S. market.”

AHA is not alone. Black Book Research conducted 

a survey of 160 health care professionals

, including physicians, executives and pharmaceutical makers. That research firm reported “widespread apprehension about escalating costs for hospitals, physicians, payers, and patients.”

"Health care providers, payers, and patients will all experience the financial ramifications of these tariffs," Black Book founder Doug Brown said in a statement. "As medical supply costs escalate, hospitals and insurers will be forced to make difficult financial decisions, inevitably passing increased expenses down to patients through higher out-of-pocket costs."

The American Medical Manufacturers Association (AMMA) also 

cited statements from other industry leaders

“Make no mistake, if there are widespread tariffs anywhere from the 10% to 25% range, I anticipate there will be corresponding price increases,” Jason Hollar, CEO of health care services and products company Cardinal Health, told analysts during the company’s earnings call earlier this year, as cited by AMMA.

By the numbers: medical supplies and equipment

The health care industry relies heavily on imported medical supplies and equipment. For instance, as of May 2, 2024, the U.S. had imported $14.9 billion in medical equipment, with a substantial portion originating from China. AHA analyzed 

 last year as the administration of President Joe Biden was considering increased tariffs on various Chinese-made medical products, including syringes, medical masks, respirators, and gloves. Various tariffs were set to rise from 25% to 50%, with most increases taking effect at staggered times starting last summer.

Those heightened tariffs were expected to escalate the prices of high-volume medical supplies, such as personal protective equipment (PPE) and syringes, thereby exacerbating the financial challenges that hospitals and health care providers already face. The same concerns have been repeating across the industry since the president’s Feb. 1, 2025, announcement.

The survey by Black Book Market Research had results showing more than 80% anticipate a surge in costs for hospitals and health systems by at least 15% in the next six months due to increased import expenses. Approximately 70% predict that drug costs will rise by at least 10%, assuming the higher tariffs are implemented.

In February, AdvaMed, the Medtech Association, President and CEO Scott Whitaker outlined 

the risks tariffs pose on medical devices

“We have shared with the administration our concerns about the potential impact tariffs could have on the medical technology supply chain that American patients depend on for their care,” Whitaker said in a statement. “In light of that risk, an exemption was provided for most medical devices during President Trump’s first term with respect to the tariffs on China, and we are advocating for a similar approach this time.”

The medical device market is highly regulated, a factor that could lead to harsh financial effects if tariffs are imposed. The U.S. Food and Drug Administration decides what products can put on the market, and then Medicaid, Medicare, and the U.S Veterans Administration largely determines the reimbursement for procedures using medtech products.

“This means tariffs impact American companies similarly to an excise tax, which would lead to less R&D/innovation, layoffs, 

for the above-mentioned payors and patients, or all of the above,” Whitaker said. “Additionally, moving manufacturing from one facility to a different or new facility requires FDA approval, which makes it difficult in the short term to adjust production to the U.S.”

The pharmaceutical sector is particularly vulnerable to the effects of tariffs, given its dependence on global supply chains for active pharmaceutical ingredients (APIs) and finished products. China, for example, is a major supplier of both raw pharmaceutical ingredients and finished medications to the U.S., especially for generic drugs, which constitute 90% of U.S. prescriptions. The imposition of tariffs could disrupt the availability of these essential medicines, leading to 

Generic drug manufacturers, operating on thin profit margins, may find it challenging to absorb the additional costs imposed by tariffs. This situation could result in reduced access to essential medications for patients, particularly those relying on affordable generic options. Moreover, the potential for engineered shortages, as opposed to accidental ones, raises concerns about the lack of contingency plans to mitigate these impacts, the Vox report said.

Hospitals and health care providers are already navigating a complex financial landscape, and the additional burden of increased costs due to tariffs could exacerbate existing challenges. AHA estimated medical supply expenses account for approximately 10.5% of the average hospital’s budget, totaling $146.9 billion in 2023 — a $6.6 billion increase over 2022. The anticipated rise in prices for essential supplies could strain hospital budgets further, potentially affecting staffing, patient services, and the ability to invest in new technologies.

Smaller healthcare facilities and clinics, which may lack the purchasing power to negotiate favorable terms with suppliers, could be disproportionately affected. These institutions might face difficulties in maintaining adequate inventories of necessary medical supplies, thereby impacting patient care delivery.

Potential benefits and strategic considerations

While the immediate effects of tariffs present challenges, some argue that these measures could incentivize domestic production of medical supplies and pharmaceuticals, thereby reducing dependence on foreign sources. AMMA Executive Director Eric Axel suggested that tariffs could help U.S. manufacturers become more competitive, which is key to protecting the U.S. healthcare supply chain.

“We basically go from one emergency to another. If we don’t have resilience, we leave ourselves exposed,” he said in the 

However, transitioning production domestically is a complex and time-consuming process. Establishing new manufacturing facilities for medical equipment could take between 1.5 to two years under ideal conditions, while launching drug manufacturing facilities might require three to five years.

During this transition period, the health care system would need to navigate the challenges posed by tariffs while working towards greater self-sufficiency.

In anticipation of tariffs, pharmaceutical companies acknowledged they were exploring strategies to mitigate financial impacts. For instance, Pfizer's CEO, Albert Bourla, indicated that 

the company could leverage its existing U.S. manufacturing facilities

 in constructing four new U.S. manufacturing plants, aiming to reduce dependency on foreign imports and safeguard the supply of critical medications.

The AMMA analysis noted: “Companies are coping with the uncertainty around Trump’s tariffs and trying to determine whether they’re temporary threats or a new kind of normal.”

“This administration, in the first iteration, made policy at 2am on Twitter. Things are constantly changing,” Kyle MacKinnon of group purchasing organization Premier said in that report. “We’re collectively trying to analyze and evaluate with the information we have right now, knowing it’s going to probably change, and we’re just going to have to keep flexible and pivot.”

Physicians should be cognizant of how tariffs on imported medical goods can indirectly affect their practice and patient care. Increased costs for medical supplies and medications may lead to budget constraints within healthcare facilities, potentially resulting in staffing shortages, reduced access to necessary equipment, and limitations on available treatments. Physicians might also encounter patients facing higher out-of-pocket costs for medications, which could affect adherence to treatment plans.

Staying informed about these economic factors enables physicians to advocate effectively for their patients and collaborate with healthcare administrators to develop strategies that mitigate the negative impacts of tariffs. This might include participating in policy discussions, supporting efforts to bolster domestic production of medical supplies, and working closely with patients to navigate changes in medication availability and costs.

The imposition of tariffs on imported medical goods presents a multifaceted challenge to the healthcare sector, influencing costs, supply chains, and patient access to essential services. While there is potential for long-term benefits through the promotion of domestic manufacturing, the immediate and short-term impacts necessitate careful consideration and proactive measures. Physicians, as frontline providers of care, play a crucial role in adapting to these changes and ensuring that patient care remains uncompromised during periods of economic adjustment.

Tariffs on imported medical goods significantly impact the healthcare sector, affecting medication costs, availability, and financial stability of institutions. The U.S. administration's tariffs on imports from Canada, Mexico, and China aim to address illegal immigration and drug issues. However, these tariffs could jeopardize medication and device availability, escalating costs for hospitals, insurers, and patients. The pharmaceutical sector, reliant on global supply chains, faces potential shortages and price hikes. While tariffs may encourage domestic production, transitioning is complex and time-consuming, necessitating strategic adaptation by healthcare providers.

President Trump says it’s necessary to impose extra costs on goods from Canada, Mexico and China. What does that mean for the health care sector? Potentially, a lot.

Topics

Trump tariffs on imports and effects on health care, explained

Glucagon-like peptide-1 receptor agonist (GLP-1 RA) drugs are emerging as a medical breakthrough in the treatment of obesity.

Some of the people most excited for them are doctors who counsel patients on metabolic bariatric surgical treatments, and the surgeons who perform those procedures.

Proponents say metabolic bariatric surgery to reduce the size of the stomach remains a valid treatment that is vastly underutilized, even misunderstood, in contemporary American medicine and health care. The new medications are not about to put them out of business, they said.

“People ask that question: Is bariatric surgery going to become obsolete? We also get asked the question: Does lifestyle change become obsolete? Do we not need to worry about diets anymore?” said Kristina Henderson Lewis, M.D., M.P.H., S.M., and associate professor of epidemiology and prevention at Wake Forest University School of Medicine.

“I think the answer to both of those is no,” Lewis said. “If anything, it makes me more excited about the outcomes that we can expect to achieve with lifestyle interventions and bariatric surgery.”

Once the U.S. Food and Drug Administration approved the GLP-1 RA drugs for obesity management, in 2022 and 2023, there was a noticeable change in U.S. health care. Comparing the second half of 2022 with the second half of 2023, GLP-1 RA drug prescriptions shot up 132.6%. The number of patients undergoing metabolic bariatric surgery dropped 25.6%, according to “Metabolic Bariatric Surgery in the Era of GLP-1 Receptor Agonists for Obesity Management,” published in 

Is that the beginning of the end of bariatric surgery? Or the beginning of a new era of therapy?

“I think the way to think about this is from a different direction, and from the patient’s perspective, that this is almost the golden age of treatment for obesity,” said study corresponding author Thomas C. Tsai, M.D., M.P.H., a metabolic bariatric surgeon in the Department of Surgery at Brigham and Women’s Hospital in Massachusetts. “Really, it’s about how we take all the different treatment options we have and use that multidisciplinary approach to meet the overall health goals of patients.”

The time has come for obesity specialist physicians to borrow concepts from oncologists and cancer treatments, Tsai said. GLP-1RA drugs can be neoadjuvant or adjuvant treatments combined with a form of surgery that remains a gold standard treatment with the highest degree of total body weight loss, and with the most data showing long-term effectiveness.

“Really, the thinking is moved from thinking of, what is the best treatment at any given time? To thinking about, what is the best treatment course for a patient over the life cycle of what effectively is a chronic disease?” Tsai said.

That study had another telling finding, he said. Even with the shift from surgery to pharmacologic management, fewer than 6% of patients with obesity in the commercially insured population actually were treated with best-in-class medications or best-in-class surgical procedures. Only about 1% of patients who met indications for it were undergoing the procedures at a given year, Tsai said.

While those percentages are small, there is a large number of Americans dealing with obesity and overweight. The drugs are effective, but the surgeries can help people lose up to 35% of their body weight, said Caroline Apovian, M.D., FACP, FTOS, DABOM, co-director of the center for weight management and wellness at Brigham and Women’s Hospital and a professor of medicine at Harvard Medical School.

“How many people are we talking about in the United States?” she said. “Well, BMI over 40 has grown four-fold since 1960. This is about maybe seven to 10 million Amercians. Yes, those people can be helped by our new medications, but a good proportion of those people can be helped even more by bariatric surgery.”

 published “Two-year effects of semaglutide in adults with overweight or obesity: the STEP 5 trial.” The study found “substantial, sustained weight loss,” approximately 15% of body weight, for adults with obesity or with overweight and at least one weight-related comorbidity. It was part of a steady stream of reports about the new miracle drugs melting away body mass.

The same month, there was another medical development, with perhaps less attention. The American Society for Metabolic and Bariatric Surgery (ASMBS) and the International Federation for the Surgery of Obesity and Metabolic Disorders (IFSO) published their new “Guidelines on Indications for Metabolic and Bariatric Surgery – 2022.”

They replaced a consensus statement developed by the National Institutes of Health in 1991. The new guidelines were long overdue, said ASMBS President Ann Rogers, M.D., FACS, FASMBS, DABS-FPMBS, director of the surgical weight loss program at Penn State University. She credited ASMBS past president Shanu N. Kothari, M.D., for pressing the specialty for new standards of care.

“It just says something about the stigma of obesity, because we have new treatments for all sorts of things like breast cancer and colon cancer and – you name a disease, and we have something much newer than 1991,” Rogers said.

Then, the surgeries were open. The first laparoscopic metabolic bariatric surgery was done later in the 1990s. Now they are minimally invasive, and moving toward robot-assisted, with safety rates on par with or better than operations such as gall bladder removal, hernia repair or knee replacement, Rogers and Tsai said.

Some insurance companies have embraced the new standards, some have not, Rogers said. “But for patients, I think it’s opened the door for a lot of people to realize that they have this disease,” she said.

Rogers, who has performed thousands of metabolic bariatric surgeries, described current trends in the patient experience with the procedure and with insurance.

Worldwide, metabolic bariatric surgery patients tend to be approximately 80% women. Most commercial insurance plans will cover bariatric surgery, Rogers said, as long as patients spend a certain amount of time or make a minimum number of physician visits in a preparation program. There is nutritional education, and insurers may or may not pay for visits with a dietitian. Some will require cardiology or pulmonary evaluations, a sleep study, or other tests. Some insurers mandate patients not gain weight during the program – not even one pound, she said.

“I mean, we jump through all sorts of hoops so that patients can get authorization for the surgery,” Rogers said. “There’s just a bunch of nonsense, really, that is not based in science.”

Patients have encountered insurance company “headwinds” in covering the new GLP-1 RA drugs. The same resistance has existed for years about paying for metabolic bariatric surgery, Tsai said.

Glucagon-like peptide-1 receptor agonist (GLP-1 RA) drugs have significantly impacted obesity treatment, leading to a rise in prescriptions and a decline in bariatric surgeries. Despite this, experts argue that bariatric surgery remains a crucial, underutilized option, offering substantial weight loss and long-term effectiveness. The integration of GLP-1 RAs as adjunctive therapies could enhance treatment outcomes. However, access to both medications and surgeries is hindered by insurance barriers. Updated guidelines and increased awareness may improve patient access and acceptance of these life-saving interventions.

Proponents say the surgical procedures are underutilized and misunderstood in contemporary medicine.

Nicole Canfora Lupo

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