The proposed 25% tariffs on imported pharmaceuticals—announced earlier this year as part of the Trump administration’s broader push to spur domestic manufacturing—have sparked significant concern across the healthcare and insurance sectors. For the workers’ compensation industry, the implications could be especially significant if these tariffs are implemented. As the possibility of rising prescription drug prices and supply chain instability looms, insurers, employers, and injured workers all face heightened uncertainty and potential cost exposure.
Here’s what you need to know about how these tariffs could affect workers’ comp claims, coverage, and costs—and how to prepare.
A Direct Hit to Workers’ Comp Drug Costs
Generic medications are a cornerstone of cost-effective workers’ compensation treatment plans. From pain management to chronic condition control, these drugs help injured workers recover and return to work faster—while helping insurers and employers control claim costs.
If enacted, the proposed 25% tariffs would apply to a wide range of imported pharmaceuticals, including generics. As The New York Times reports, even a generic heart medication could see significant price hikes if manufacturers pass along increased production costs to insurers and consumers.
The potential result? Higher per-claim medical costs, increased pharmacy reimbursement complexity, and possible premium increases for employers across sectors.
For insurers evaluating how to adjust to sudden pricing volatility, platforms like TrueClaims™ support pharmacy reimbursement modeling and automated workflows that can adapt quickly to pricing changes. This allows teams to implement strategic responses faster, minimizing delays and preserving cost-efficiency.
Supply Chain Disruptions and Treatment Delays
Tariffs aren’t just about price—they could also disrupt access.
According to WorkersCompensation.com, tariffs on critical medical imports (including pharmaceuticals, prosthetics, and surgical supplies) have the potential to delay treatment and extend disability periods if implemented. This could impact not just claim duration and indemnity costs, but also the quality of outcomes for injured workers.
Add in the risk of shortages caused by strained global supply chains, and stakeholders may face a perfect storm of treatment interruptions, increased litigation over access and coverage, and longer claim closures—should tariffs go into effect.
With growing uncertainty around pharmaceutical availability, True’s integrated claims management capabilities help insurers track delays and access issues in real time. This allows case managers and claims adjusters to proactively intervene, communicate updates, and reduce disruption to recovery timelines—all within a single connected system.
States Respond with Reimbursement Reforms
Recognizing the downstream risks, several states have introduced or are considering pharmacy reimbursement legislation in 2025 to counteract general cost pressures. For example, New York has proposed measures requiring equitable reimbursement for out-of-network pharmacies under specific conditions.
While these legislative efforts may provide some relief, they could also complicate pharmacy benefit management (PBM) strategies, contract negotiations, and pharmacy network management for insurers.
Navigating shifting regulatory landscapes can be complex. TruePolicy™ and TrueClaims offer integrated compliance tracking and automated reporting features that support adherence to evolving state rules like New York’s pharmacy reimbursement mandates—ensuring insurers stay compliant without increasing administrative burden.
Employers May Feel the Strain
Employers already navigating tight labor markets and rising benefit costs may face additional pressure if tariffs are enacted. As ISHN notes, some businesses may consider reducing safety budgets to offset increased insurance premiums or supply chain costs—ironically increasing the risk of workplace injuries.
This potential cycle—higher costs leading to fewer preventive measures, which in turn drive up claims—could threaten the very foundation of workplace safety and comp stability.
Employers using self-insured programs can benefit from the combined use of TruePolicy and TruePortals™, which offer real-time access to claims data and enable faster identification of high-cost drivers. These insights help HR teams and safety coordinators maintain safety program integrity and avoid compromising injury prevention measures due to budget constraints.
Strategic Takeaways for Stakeholders
To navigate the uncertainty ahead, each player in the workers’ compensation ecosystem must adapt:
- Insurers should proactively adjust reserving assumptions and collaborate with PBMs to identify cost-effective alternatives without compromising care quality.
- Employers need to prepare for potential premium increases and prioritize return-to-work strategies to mitigate prolonged disability claims.
- Injured workers may need advocacy support to ensure timely access to medications and continued care despite new barriers.
- Technology-forward organizations are leveraging platforms like True to centralize data, automate workflows, make data-informed strategic adjustments, and mitigate the administrative complexity introduced by macroeconomic disruptions such as tariffs.
Final Thoughts
Tariffs may be rooted in trade policy, but their consequences could be far-reaching. In the world of workers’ compensation, where medical costs already outpace inflation, a 25% increase in drug prices could set off a chain reaction—one that inflates claims, delays care and stretches an already burdened system, if implemented.
As we navigate these changes, digital transformation tools like True will be instrumental in helping organizations remain resilient. From automating claims adjudication to enhancing transparency for employers and workers alike, technology can play a crucial role in managing volatility with precision and empathy.
For more insights on the hottest topics in the insurance industry and to keep updated on the latest trends, join the True Community, or contact Ryan Smith at ryan@experiencetrue.com to discuss how True solutions can help equip your teams to stay ahead of shifts.
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