Ireland’s healthcare system is bracing for intensified fiscal pressure as rising drug costs collide with the chaotic reality of U.S. tariffs on pharmaceutical exports, a sector critical to the Irish economy and public health infrastructure.
Speaking before the Oireachtas Health Committee last week, Robert Watt, Secretary General of the Department of Health, issued a stark warning about the trajectory of Ireland’s drug spending. “The [national] drugs budget is increasing 9% or 10% a year. It is €3.6 billion or €3.7 billion now. The trajectory is unsustainable as we are now,” Watt said.
The Department is preparing to enter negotiations with pharmaceutical suppliers in an effort to contain costs.
Watt described the challenge as “an incredible challenge for us and all countries,” citing the growing demand for high-cost treatments such as Mounjaro, Ozempic, and oncology drugs. “There is an enormous challenge in terms of how to figure out what to support, how to support and how to fix that within a financial envelope the country can afford,” he added.
Tariffs could strain budget
The potential fallout from U.S. tariffs on Irish pharmaceutical exports compounds Ireland’s budgetary dilemma. Although the tariffs are aimed at goods entering the U.S., analysts warn of indirect consequences for Ireland’s domestic drug market and healthcare system.
Ireland exports approximately €33 billion in pharmaceuticals to the U.S., much of it produced by American multinationals operating in Ireland.
A 15% tariff could dampen U.S. demand, leading to oversupply in Europe and temporary price shifts. However, the longer-term risks are more severe: reduced profitability may prompt firms to scale back Irish operations, raising local production costs and potentially inflating domestic drug prices.
Supply chain disruptions are also a concern. Tariffs may force companies to restructure sourcing strategies, increasing costs for raw materials and components – costs that could be passed on to Irish consumers.
Medical devices, employment risk
The medical device sector, another pillar of Ireland’s health economy, faces acute vulnerability. Grainne Mahon Henson, Head of Health Sector at Bank of Ireland, told Think Business in June that “Medical devices have emerged as the most vulnerable segment, accounting for 41% of tariffed trade valued at €7.9 billion.”
The broader economic implications are equally troubling. With over 50,000 employed in Ireland’s pharmaceutical sector – many by U.S. firms – a decline in exports could trigger job losses and erode tax revenues, further straining public healthcare funding.
Geopolitical uncertainty
Despite current exemptions under August’s US-EU Turnberry trade agreement, experts caution that Ireland remains exposed to shifting U.S. trade policy.
Fredrik Erixon, Founding Director of the European Centre for International Political Economy (ECIPE), told Euractiv: “Europe may be protected by the Turnberry trade agreement now, but I don’t think anyone in Europe is so naive they think this agreement will hold for the rest of this administration.”
“Trump is going to come back and pressure Europe more on trade and economics, and if he won’t do it over pharmaceuticals or medical technologies, he will do it on other policies or sectors, and if he won’t use any of the current 232 investigations going on, Trump will find another legal pretext.”
“Europe’s problem on pharma is that many companies are already planning to make key R&D and plan investments there, and that it will find its own branded pharma sector to be drained.”
“The US may not even need to threaten with tariffs as this development is underway anyway,” he said, adding, “I think what concerns them more than tariffs is that Trump goes ahead with the MFN (Most-Favoured-Nation) idea on pharmaceutical prices and that European sellers in the US will have to cut prices.”
Pressure points
Varg Folkman, Policy Analyst at the European Policy Centre (EPC), echoed the uncertainty: “I don’t think we can be sure about Trump’s intentions regarding tariffs at all.”
He warned: “There is definitely the chance of Trump pressuring firms failing to open production lines in the US… which is the whole reindustrialisation rationale behind what’s happening. Exemption from the 232 investigations, especially on pharma, was one of the key wins for the EU in the trade deal with the US. Whether the exemption stands or is revisited by the Americans, will most likely rely on other issues than trade itself.”
“Tariffs is just one measure in the broader statecraft of the US now, and previous concessions can be revisited for leverage in other settings, for instance, Trump’s push for Europe to take a tougher stance on Russia and the countries aiding Russia,” he said.
Erixon added that “For many, it is in the US market they can keep up margins and recover costs – few pharma companies will earn much money selling to Europe at European prices.”
