New tariffs on patented drugs and APIs announced

On April 2, President Trump announced new Section 232 tariffs on certain imported patented drugs and active pharmaceutical ingredients (APIs). The announcement follows a year-long investigation into the national security implications of importing drugs. Section 232 of the Trade Expansion Act allows the U.S. government to impose tariffs on goods seen as critical to national security to target numerous sectors, including pharmaceuticals.

Generics and biosimilars, as well as certain specialty drugs (including gene therapies and fertility treatments) are exempt. While the order establishes a default 100% tariff, it also creates several lower rate “off-ramps” for companies who align with the administration’s drug pricing priorities. Additionally, patented drugs and APIs imported from the European Union, Japan, Switzerland, Liechtenstein, South Korea, and the United Kingdom have lower tariff rates (or are exempt) based on current trade agreements.

The tariffs will go into effect July 31 for certain large companies and Sept. 29 for all other companies to allow time to negotiate new agreements. Government Affairs will be closely monitoring pharmaceutical manufacturer responses to this announcement and potential downstream impacts.