On his platform Truth Social, Trump said the rule would only affect a “branded or patented Pharmaceutical Product,” effectively leaving generic medicines untouched. Generic drugs account for the vast majority of prescriptions in the U.S.
Following Trump’s announcement, the administration clarified that the tariff would not supersede the 15 percent tariff trade deal between the U.S. and the European Union reached earlier this year.
“The EU accounts for roughly 70 percent of the U.S.’s roughly $200 billion in annual pharmaceutical imports. Asia accounts for 20 percent of imports, but that includes a significant amount of generics, which is excluded from tariffs,” Arthur Wong, health care managing director at S&P Global Ratings, told The Hill.
It remains unclear whether this rule applies to drugmakers who already have a manufacturing footprint in the U.S., as well as whether companies only need to manufacture one of their drugs on U.S. soil to gain the exemption or if it will be applied case-by-case.
In a rush to get ahead of the situation, multiple companies issued statements touting U.S. investments. AstraZeneca, GSK and Novartis have already pledged billions of dollars in new facilities or research and development in the U.S. this year.
Another federal drug price control policy that exempts generics, the Inflation Reduction Act (IRA), could be impacted by the enforcement of these new tariffs.
The IRA’s Medicare Drug Price Negotiation Program does not apply to medical products that have generics or biosimilars on the market, meaning branded products are the only ones affected. The discounted prices for the first 10 drugs chosen for Medicare negotiations are scheduled to go into effect beginning on Jan. 1.
These tariffs are ostensibly to support Trump’s goal of moving manufacturing back to the U.S. and supply chain experts say this requires a measured approach.
“Our position has always been that tariffs, when implemented in a targeted and thoughtful manner via a slow and steady glide path approach, can spur American ingenuity and help drive more resiliency in the supply chain, but when you implement them too fast and too furious, you do risk creating supply chain ripples, and that is the concern currently,” said Soumi Saha, senior vice president of government affairs at the health care improvement company Premier Inc.
Saha noted that domestic doesn’t always mean secure, noting the IV fluid shortage that hit the country last year after a North Carolina plant was shut down by Hurricane Helene.
