US Imposes 100% Tariffs on Patented Drug Imports

The United States has fully implemented a 100% tariff on patented drugs and their raw materials imported into the country, effective Tuesday. This measure, enacted by presidential order on April 2, leverages Section 232 of the Trade Expansion Act, allowing tariffs to be imposed for national security reasons. Initially applied only to specific companies listed in an appendix to the order since July 31, the tariff now extends to all companies whose products fall under its scope.

The U.S. administration asserts that heavy reliance on imported drugs and materials poses a risk to national security and supply chains, aiming to incentivize domestic pharmaceutical production. Different tariff rates apply based on the country of origin and whether companies have agreements with the U.S. Department of Commerce to relocate manufacturing to the U.S.

Generic drugs, biosimilars, and their raw materials are currently exempt from these tariffs. Furthermore, the Department of Commerce has established a framework for zero tariffs on specific categories of unique drugs. These include treatments for rare diseases, radiopharmaceuticals, plasma-derived therapies, fertility drugs, cell and gene therapies, antibody-drug conjugates (ADCs), and countermeasures for chemical, biological, radiological, and nuclear threats, as well as veterinary products.

This exemption is not automatic. To qualify, products must originate from one of 19 countries and blocs with existing or pending trade and security agreements with the U.S., such as the European Union, the UK, Switzerland, Japan, South Korea, Taiwan, India, Vietnam, and Indonesia. Alternatively, an exemption can be granted by the Department of Commerce if the import is deemed essential for urgent U.S. health needs. Israel is not listed among the countries eligible for this exemption.

Companies seeking an exemption based on urgent health needs must submit individual applications per product. Justifications can include the treated disease, availability of alternative treatments, and the number of U.S. patients using the drug. Decisions will be made on a case-by-case basis, in consultation with the U.S. Trade Representative and the Department of Health and Human Services. Drugs intended for clinical trials, research and development, or non-commercial use will receive a zero tariff under a dedicated provision.