Tariffs Could Increase Prescription Drug Costs And Premiums For Medicare, Other Insurance

Higher medical costs and insurance premiums are one of the unintended, unexpected effects of the new trade and tariff policies.

That’s especially true of prescription drug prices. President Trump said he is committed to reducing prices on prescription drugs.

One measure he took is to direct major pharmaceutical manufacturers to charge U.S. customers the same prices that are paid in other countries, known as “most favored nation” pricing. The companies are supposed to reduce their price to U.S. customers even when overseas customers pay lower prices because of government subsidies.

In addition, the President want to bring pharmaceutical production to the U.S. Most U.S.-based drug manufacturers have their drugs manufactured outside the U.S. Total prescription imports are estimated to be $200 billion per year.

To bring manufacturing to the U.S., the President promised tariffs on medications. He said in August that he would propose a small initial tariff on pharmaceuticals that would rise to 150% in 12 to 18 months. After that, the tariffs would increase to 250%.

These statements followed a pronouncement by the President in July that he planned to impose 200% tariffs on pharmaceuticals but would suspend them to give the manufacturers time to bring production to the U.S.

In the meantime, the tariff and trade deal negotiated with the European Union in July imposed a 15% tariff on imports such as medications.

The tariffs and threats of additional tariffs are having effects on insurers.

Medical insurance carriers must notify states when they plan to raise premiums and seek approval of the increases. A number of medical insurers have started to notify states that they plan to charge higher premiums for individual and small group policies in 2026.

Tariffs are one reason for the increases. Insurers expect tariffs to increase the cost of prescription drugs, medical devices and other medical products and services, according to the Kaiser Family Foundation.

Prescription drug price increases appear to be the biggest tariff-related concern of the insurers. The insurers say tariffs alone account for planned premium increases of 2.2% to 3.6%.

Other factors also are expected to push premiums higher, including higher demand for medical services and cost increases due to inflatin and other factors in addition to tariffs.

Proposed 2026 premium increases for private health insurance policies are 20% and higher, according to Axios.com.

Not all insurers have estimated their costs for 2026 and submitted paperwork on proposed premium increases.

Late in 2026, Medicare beneficiaries will learn how the policy changes and other factors will affect Part B Medicare premiums for 2026.

Medicare premiums are based on the estimate by the Centers for Medicare and Medicaid Services of next year’s cost of the program. Part B premiums are supposed to pay for an estimated 20% of total costs.

The premiums are expected to rise in 2026 because of the same factors that pushed up costs for private insurers. But CMS hasn’t indicated how much Medicare premiums might increase in 2026 and won’t set the final premiums until the last quarter of 2025.