Strategic Importance of Pharmaceuticals
Pharmaceuticals occupy a strategic position linking trade, innovation, and public health security in North America.
Moreover, the industry combines high-value exports with essential medical goods required for national resilience.
However, recent crises exposed weaknesses in global pharmaceutical supply chains.
Consequently, policymakers increasingly view drug production as both an economic and security priority.
North American Pharmaceutical Structure
The United States dominates pharmaceutical research and development worldwide.
Meanwhile, manufacturing capacity has declined as companies moved production abroad since the 1990s.
Therefore, many raw materials and chemical components used in medicines are imported.
At the same time, Canada contributes regulatory expertise and specialized pharmaceutical production.
Similarly, Mexico provides manufacturing advantages and growing generic medicine production capacity.
Nevertheless, regional pharmaceutical production remains uneven and fragmented.
Dependence on Global Supply Chains
North American drug production relies heavily on international supply networks.
Specifically, most active pharmaceutical ingredients originate in China and India.
As a result, disruptions abroad can quickly affect medicine availability in North America.
For example, export restrictions during the COVID-19 pandemic contributed to shortages of essential drugs.
Furthermore, geopolitical tensions increase concerns about supply chain security.
Innovation, Prices and Access
North America leads global pharmaceutical innovation, especially in advanced drug technologies.
However, drug affordability varies significantly across the region.
For instance, medicine prices in the United States exceed those in Canada and Mexico.
Consequently, cross-border purchasing occurs as Americans seek lower-cost medications.
Thus, policies must balance innovation incentives with affordable access.
Debate Over Tariffs and Industrial Policy
Some policymakers propose tariffs on pharmaceutical imports to encourage domestic production.
However, tariffs could raise drug prices without quickly expanding manufacturing capacity.
Additionally, retaliatory trade measures might disrupt global pharmaceutical supply chains.
Therefore, tariffs are considered a blunt instrument for supply security.
Opportunities in the 2026 USMCA Review
The upcoming review of the United States-Mexico-Canada Agreement creates an opportunity for stronger regional coordination.
For example, governments could establish shared systems monitoring medicine shortages.
Likewise, trilateral investment could expand production of active pharmaceutical ingredients and generics.
Furthermore, regulatory harmonization could simplify approval and reduce costs.
Policy Recommendations
Regional incentives for pharmaceutical production should replace unilateral tariffs.
Similarly, regulatory alignment could strengthen integration of North American supply chains.
In addition, a trilateral supply chain security council could coordinate crisis responses.
Moreover, Mexico could expand its role as a nearshoring hub for pharmaceutical manufacturing.
Finally, resilience policies must maintain affordability and equitable access to medicines.
Toward a Coordinated Regional Strategy
Pharmaceutical supply chains reveal the intersection of economic policy, public health, and national security.
Therefore, regional cooperation offers a path toward more resilient and integrated North American production.
Ultimately, leveraging USMCA could strengthen supply security while sustaining innovation and access.
Source:
Padula, W. (2026, March 4). Leveraging the USMCA to strengthen pharmaceutical manufacturing and supply chains in North America. Brookings Institution. https://www.brookings.edu/articles/leveraging-the-usmca-to-strengthen-pharmaceutical-manufacturing-and-supply-chains-in-north-america/