The 100% Section 232 tariff on patented drugs now applies broadly to imports into the US. Large drugmakers named in the April proclamation came under the tariff on July 31. Everyone else followed at 12:01 a.m. Eastern on Sept. 29.
The tariff covers patented finished drugs and ingredients, including active ingredients and key starting materials. The rate is based on when goods enter the US, not when they ship. Duty drawback is available.
The main rates are:
20% for companies with a Commerce-approved onshoring plan, rising to 100% on April 2, 2030
Zero until Jan. 20, 2029 for companies that also signed a MFN drug-pricing deal with HHS
15% for products from the EU, Japan, South Korea, Switzerland and Liechtenstein
10% for UK products, with a path to zero under a future US-UK drug-pricing agreement
Generics and biosimilars are exempt. Some specialty drugs, including orphan drugs, plasma-derived therapies, cell and gene therapies and fertility drugs, can also qualify for zero tariffs when imported from one of 19 qualifying trading partners.
Twenty-six drugmakers have signed MFN pricing deals. The administration says they represent 89% of the branded drug market. Nine joined at the end of August, including Teva, Sun Pharma, CSL and UCB.
More than 100 drugmakers make at least one drug that is not exempt, according to a preliminary Brookings analysis cited by CNN. Most rely on contract manufacturers rather than their own plants. Brookings senior fellow Marta Wosinska said US contract manufacturing capacity is at a “crazy level,” making a shift to domestic production expensive.
Smaller companies could ultimately face pressure to sell to larger drugmakers if they cannot secure tariff deals, Wosinska said.
