Dr. Scott Gottlieb, former FDA commissioner and Pfizer board member, warned that proposed tariffs on pharmaceutical imports could destabilize the U.S. generic drug supply.

In an interview with CNBC, he emphasized that while 50% of drugs consumed domestically are manufactured stateside, critical shortages could emerge if tariffs target low-margin generics reliant on Chinese supply chains.

“I fear that if the president places tariffs on those drugs, we’re not just going to see prices increase, we’re going to see companies stop manufacturing them,” he stated, noting that 70% of key chemical ingredients for drugs like antibiotics and heparin originate in China.

Gottlieb highlighted a stark divide between branded and generic drug manufacturers. Branded companies could absorb tariff costs or shift production from Europe to the U.S. due to tax and operational advantages, as seen with recent moves by Eli Lilly (LLY) and Novartis (NVS), he said. Generic manufacturers, however, operate on “very slim margins” and lack flexibility.

He added that the reliance on China extends beyond finished drugs. Over 40% of U.S. heparin supply and nearly all amoxicillin ingredients are sourced there, with intermediate chemicals often processed in India before arriving stateside.

Gottlieb stressed that reshoring this supply chain would require “targeted subsidies” and reduced regulatory hurdles, not tariffs, which risk triggering shortages of “life-saving medicines.”

He urged policymakers to separate trade deficits with Europe from national security concerns tied to China. While branded manufacturers might negotiate a “grand bargain” to return production, generics need a different strategy. “The very thing they’re trying to do is going to be the least amenable to using this tool,” he cautioned, referring to Section 232 tariffs.

Gottlieb’s solution centers on accelerating domestic manufacturing through expedited FDA and environmental approvals, rather than punitive measures.

“It takes three to five years to build a facility,” he noted during the interview, suggesting retrofitting existing sites could offer short-term relief. Without this approach, tariffs risk exacerbating the vulnerabilities they aim to fix, leaving critical generics in short supply.

Here are some of the companies involved: (MRK), (PFE), (ABBV).