How Healthcare and Life Sciences Companies Can Prepare for Tariff Shocks with Contract Intelligence

Recent tariff policies are roiling every industry and hitting particularly close to home for healthcare and life sciences companies. With new federal tariffs under discussion, it’s no longer a question of if the industry will feel the impact, but when.

From medical devices and consumables to generic medications, the healthcare sector relies heavily on global suppliers and contract manufacturers. That dependency makes visibility into contractual obligations, rights, and risks more urgent than ever.

Understanding the Stakes

Healthcare is unique in that demand for many of its products is inelastic. Patients can't pause heart medication or skip a surgical procedure because of rising costs. As a result, tariffs on critical goods—like generic pharmaceuticals from India or medical consumables from China and Mexico—can have an immediate effect on affordability and accessibility.

Because when tariffs hit, the first question is: What’s in the contract?

Meanwhile, medical device manufacturers are dealing with a different flavor of exposure. Many large devise manufacturers have shifted from in-house production to complex global sourcing models. A single device might rely on parts from half a dozen countries. If even one of those parts becomes subject to a new duty, it could bottleneck production, force pricing decisions, or erode margin.

The key questions for every company become: Can we pass the cost on? And are we protected if we can't? What is the impact on my revenue?

The Contract Challenge

These aren’t questions you can answer with guesswork. They’re answered with contracts and analytics.

Agreements between manufacturers, suppliers, and customers are filled with terms that determine how costs are shared and obligations enforced. Common examples include:

• Price adjustment clauses: Allow for renegotiation if material costs spike.
• Index-based pricing: Ties pricing to raw material cost fluctuations.
• Incoterms: Define tariff responsibility in international shipping.
• Sourcing flexibility provisions: Enable buyers to shift production across geographies.
• Termination clauses: Identify supplier contracts where they have the right to terminate for convenience if tariffs make the deal untenable
• Abnormal escalation: accounts for abnormal price increases outside of average CPI.

Unfortunately, most companies don’t have instant access to these insights—especially when contracts are scattered across business units, geographies, and legacy systems.

How Contract Intelligence Helps

This is where contract intelligence comes into play. Our healthcare and life sciences customers are using the Icertis platform to gain fast, actionable insights into their customer and supplier agreements. With clean, structured contract data, they can:

• Surface Exposure: AI analyzes your contracts to identify where tariff risks may exist—highlighting clauses related to price adjustment, force majeure, indexing, sourcing flexibility, and country of origin.
• Accelerate Renegotiation: With clause benchmarking and templates, legal and procurement teams can issue amendments across supplier agreements—such as pausing price increases or changing payment terms.
• Enable Sourcing Shifts: The system reveals whether you have alternate approved suppliers under contract in lower-tariff jurisdictions—so you can act quickly before supply is disrupted.
• Ensure Compliance and Performance: Monitor post-renegotiation outcomes to ensure suppliers are honoring agreed-upon terms—and flag discrepancies early.

Staying Ahead of the Next Disruption with Icertis

Tariffs aren’t the first disruption this industry has faced. From the medical device tax of 2011 to COVID-era supply shortages and Dodd-Frank conflict mineral regulations, healthcare companies have seen time and again the cost of not knowing what’s in the contract.

One leading U.S. healthcare provider offers a compelling example. When international sanctions disrupted the supply of critical medical products, the organization used Icertis Contract Intelligence to immediately assess their supplier exposure. Within days, they identified which agreements were impacted, surfaced alternative suppliers already under contract, and issued amendments to shift sourcing—ensuring compliance with the sanctions as well as continuity of care. This agility wasn’t built overnight; it was the result of having a centralized, AI-powered view of their entire contract landscape. That same approach can be applied to tariff disruptions, helping organizations respond with speed and confidence.

If you’re still managing contracts in static formats and disconnected systems, now is the time to modernize.

Because when tariffs hit, the first question is: What’s in the contract?

And with Icertis, you’ll have the answer.

Want to learn more about how contract intelligence can power your tariff response strategy? Check out our new whitepaper, "The Critical Role of Contract Intelligence in Navigating Tariff Challenges."