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Trump administration rolls out steep tariffs on patented drugs
The White House announced on Thursday that all patented medicines entering the United States will face a 100 % import duty, though pharmaceutical companies can sidestep the levy by negotiating agreements with the administration.
National security cited as primary motive
President Donald Trump signed the order, framing the move as a step to mitigate national security risks by encouraging domestic production of critical medications. The measure excludes generic drugs, which account for the majority of prescriptions filled in the U.S.
Exemptions and incentives for manufacturers
Companies that pledge to establish new U.S. manufacturing facilities before January 2029 will see the tariff reduced to 20 %. If firms also reach pricing agreements with the federal government, the duty can be eliminated entirely. Such deals typically require firms to sell certain medicines to programs like Medicaid at prices comparable to those in select foreign markets.
The administration has already secured commitments from several major drugmakers, with more expected to follow in the coming weeks. A senior official told reporters that large corporations have 120 days to finalize agreements, while small and medium-sized enterprises have 180 days.
"The goal is to bring the rest of the companies to the bargaining table. It's all about leverage."
Sean Sullivan, professor at the University of Washington and London School of Economics
Existing trade pacts remain unaffected
The U.S. will continue to honor lower tariffs established in recent agreements with key allies, including the European Union, Switzerland, the United Kingdom, South Korea, and Japan. Last December, the U.K. and U.S. struck a deal ensuring zero tariffs on British pharmaceutical exports to America for three years. In exchange, the U.K. agreed to increase medicine prices paid by the National Health Service (NHS).
The U.K. government hailed the arrangement as "a win for British patients, British businesses and the British economy," asserting that it would accelerate the introduction of new treatments, such as advanced cancer therapies, in the U.K.
Uncertainty over long-term impact
Analysts remain cautious about the order's real-world effects. Richard Frank, a senior fellow at the Brookings Institution and director of its Center on Health Policy, noted that the scope of exemptions and the number of companies likely to strike deals remain unclear. While large firms have largely secured agreements, smaller businesses may face higher costs due to the tariff.
"Like so much of this stuff, the devil really is in the details, and what sounds really good in a press release may not look the same when it actually hits the ground."
Richard Frank, Brookings Institution
The White House claims the tariff threat has already prompted pharmaceutical companies to commit $400 billion in U.S. investments. However, Frank pointed out that domestic manufacturing typically incurs higher costs, and pricing agreements unveiled so far have been limited in scope. The reduced tariff rates are set to expire at the end of Trump's term in January 2029.
Adjustments to metals tariffs announced
In a separate move, the administration announced modifications to its tariffs on steel, aluminum, and copper. The changes include exempting items that do not contain significant quantities of these metals from the levies.
