Tariffs are rapidly becoming a central concern in the healthcare sector. With existing tariffs impacting goods from China and the looming possibility of additional tariffs on pharmaceuticals, the healthcare industry is bracing for widespread effects. This report examines how healthcare executives across various sectors are addressing these challenges and mitigating potential negative consequences.

Hospitals: Minimizing the Impact

Despite important reliance on overseas medical supplies-totaling $75 billion in 2024-major U.S. hospital systems are publicly downplaying the immediate impact of tariffs. Their strategies focus on domestic sourcing and existing contract agreements.

• HCA healthcare: Sam Hazen,CEO of HCA Healthcare,which operates 222 hospitals,stated during an April 25 earnings call that 75% of the company’s supply expenses come from the U.S., Canada, Mexico, or they come from products that are currently exempt from tariffs. He added,I do believe that our tariff risk for 2025 is manageable.
• Worldwide Health Services: Steve Filton, EVP and CFO of Universal Health Services, with 187 hospitals, noted in an April 29 earnings call that approximately three-fourths of their purchases are insulated from tariffs.
• Northwell Health: Donna Drummond, SVP and chief expense and chief sustainability officer at Northwell Health, which has 28 hospitals, indicated that existing supply contracts provide a buffer. She stated that they don’t expect to see the effects for quite some time, but acknowledged that it’s hard to judge the magnitude until we hear directly from our suppliers.

Pharmaceuticals: A mixed Bag of Reactions

President Donald Trump announced plans on May 5 to impose pharmaceutical tariffs, adding further uncertainty to the sector.Pharmaceutical executives have offered varied perspectives on the potential impact.

• Expected Multimillion-Dollar Impact:
  • Johnson & Johnson: CEO Joaquin Duato projected $400 million in tariff-related costs for the year during an april 15 earnings call.
  • Merck: CEO Robert Davis anticipated a $200 million hit,as stated in an April 24 earnings call.
• Downplaying Concerns:
  • Eli Lilly: CEO David Ricks stated during the company’s May 1 earnings call that tariffs do not materially change Lilly’s 2025 financial outlook.
  • Novo Nordisk: CEO Lars Fruergaard Jørgensen echoed this sentiment during the company’s May 7 earnings call.

Health Tech: Navigating Uncertainty

Health technology companies are also projecting diverse outcomes from the tariff implementations. The impact varies based on the nature of their products and supply chains.

• Boston Scientific: CEO Michael Mahoney estimated roughly $200 million in tariff costs for 2025 during an April 23 earnings call.
• DocGo: CEO Lee Bienstock indicated on a May 10 earnings call that the primary impact would be on the company’s vehicle fleet, noting that once the vehicle becomes more expensive to maintain, that’s when we procure a new one, so the tariffs may impact that calculation.
• Hims & Hers: CFO Yemi Okupe expressed confidence during the company’s May 5 earnings call that they could offset any tariff-related challenges.

Payers: Optimism with Caution

Insurers are cautiously optimistic, pending the specifics of pharmaceutical tariffs. Contract pricing and existing legislation provide some buffer against immediate price increases.

• UnitedHealth Group: Former CEO Andrew Witty stated during the company’s April 17 earnings call that executives feel pretty good about potential tariff impacts, but acknowledged that this could change depending on the pharmaceutical tariffs. He added that the company is pretty well positioned due to existing contract prices and the Inflation Reduction Act, which prevents drugmakers from raising prices too quickly.
• Cigna: CEO David Cordani announced during the insurer’s May 2 earnings call that the company is raising 2025 earnings estimates to at least $29.60 per share, up from $29.50, despite a dynamic surroundings that included tariffs and trade as well as significant geopolitical and evolving social impacts.

Retail Pharmacy: Waiting for Details

Retail pharmacies are adopting a wait-and-see approach, especially concerning pharmaceutical tariffs. They are evaluating alternative sourcing strategies to mitigate potential disruptions.

• CVS: CFO Thomas Cowhey stated during the company’s May 1 earnings call that they are closely monitoring potential tariff repercussions. CEO David Joyner noted that CVS doesn’t expect a significant impact on front-of-store items due to domestic sourcing but is looking at alternative sourcing and/or diversifying the suppliers. He also confirmed that the deal with Novo Nordisk to include Wegovy on Caremark’s formulary will not be affected, as Novo manufactures Wegovy in the U.S.
• Walgreens: Declined to comment on the potential effects of tariffs.