The US will impose a 100% tariff on certain pharma products entering the country, the latest move by the Trump administration to decrease reliance on imported medicines from other regions.
“We will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product,” US President Donald Trump announced on his social media platform, Truth Social, on 25 September.
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The tariff, slated to apply from 1 October, does come with one key exemption – companies which are building or expanding drug manufacturing facilities in the US will be immune from the 100% rate. Those which have broken ground or have buildings under active construction are covered by the exemption.
“There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started,” Trump added.
Drugmakers flag US construction activities
In the face of looming levies, European pharma companies have been busy investing in the US this year. When asked for comment on the tariffs, a Roche spokesperson directed Pharmaceutical Technology to the $50bn it has pledged to bolster manufacturing in the US. The drugmaker’s US subsidiary, Genentech, broke ground on a new $700m obesity-drug manufacturing facility in North Carolina in August.
Novo Nordisk has been in the limelight due to the popularity of its weight loss and type 2 diabetes medications in the US.
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By GlobalData“Right now, cranes are rising at Novo Nordisk’s US manufacturing site in North Carolina; where we are halfway through a $4.1bn expansion,” Novo’s CEO Mike Doustdar said in an emailed statement to Pharmaceutical Technology.
“If approved, our first-in-class and efficacious oral GLP-1 treatment for obesity (Wegovy pill) will be launched first in the US – and proudly manufactured 100% in the US,” Doustdar added.
Following the introduction of the sweeping tariffs on pharmaceutical imports, the EU could be in a favourable position, as the Union previously signed a trade agreement with Trump, freezing pharmaceutical tariffs at a rate of 15%.
“The EU and US already have a trade agreement in place; urgent discussions are needed on how to avoid any tariffs on medicines that harm patients in the EU and the US. At the same time, the EU must improve its support towards the cost of global research and development,” Nathalie Moll, director general of European pharma trade body EFPIA, told Pharmaceutical Technology.
Novo CEO Doustdar, however, said it is “not yet clear how today’s announcement relates to the EU/US trade agreement”. He said the company will work with Trump’s administration “to ensure policies continue to support innovation, investment, and patient access on both sides of the Atlantic.”
UK players have also been busy shifting operations to the US. AstraZeneca has outlaid $50bn to bolster its footprint in the US, while compatriot GSK pledged $30bn of funds for the same purpose. Neither AstraZeneca nor GSK had a statement for Pharmaceutical Technology.
A spokesperson for the Association of the British Pharmaceutical Industry (ABPI) said it is “awaiting further detail to determine what this means for the UK”.
US reliance on drug imports
The US manufactures the active pharmaceutical ingredient (API) in 15% of branded drug prescriptions in the country, according to data from US Pharmacopeia. The European Union (EU) is a major supplier of APIs to the US, making up 43% of branded drugs on US prescriptions, as per the same analysis.
US imports of pharmaceuticals and medicinal products reached nearly $233bn in 2024, as per data from the Census Bureau.
Trump has utilised tariffs and drug pricing model reforms to increase the competitiveness of the US industry on the international pharma stage. His administration’s main aim is to incentivise drug companies to move manufacturing operations to the US and decrease reliance on pharmaceutical imports from other countries. For drugmakers already based in the US, the administration’s wish is for them to bed in.
US pharma giant Eli Lilly has committed $27bn through its manufacturing expansion on home soil. Under this initiative, Lilly will build a $6.5bn manufacturing site for its oral weight loss pill, orforglipron, which is expected to become one of its best-selling medications if it were to gain approval.
“The US accounts for around 40% of global pharmaceutical sales, so the administration knew it had the upper hand and could force Big Pharma to partly reshore production to the US. Knowing this, the industry has been in negotiations with the administration for the last six months and was expecting some degree of tariffs,” said GlobalData analyst Carolina Pinto.
The threat of a tariff rate imposed specifically on the pharma industry has been looming for a while. Experts have forecast that levies disrupt supply chains and ultimately drive drug prices up, affecting patient access to medicine.
“The Trump Administration is pursuing mutually incompatible policies. On the one hand, they want the lowest price for prescription drugs in any country the US would reference under the Most Favored Nation (MFN) executive order. On the other hand, they want to impose 100% tariff on branded drug import. You can’t have both,” said Milena Izmirlieva, GlobalData’s senior director of health economics and market access.
“Tariffs on medicines, however excessive, would create the worst of all worlds. Tariffs increase costs, disrupt supply chains and prevent patients from getting lifesaving treatments,” EFPIA’s Moll commented.
With so many big pharma companies pledging billions of dollars into boosting drug production in the US, major impacts on the industry are unlikely to materialise, acccording to one investment firm.
“We see limited impact from this tariff announcement. The more important factor to watch is the trajectory of US drug pricing policy,” said Servaas Michielssens, Candriam’s head of thematic global equity, healthcare.
Generic drugs will be immune to looming tariff costs, which will be welcomed by industry members and patients alike, as more than 90% of generics prescribed in the US rely on imports. According to the US Food and Drug Administration (FDA) generics currently make up 9 out of 10 prescriptions in the US.
“Imposing tariffs on generic drug makers was always going to be a hard sell. The US healthcare system is wholly reliant on generic medicines, making up 90% of volume sales in the US, and with already low profit margins, generic drug makers would never relocate production to the US,” Pinto added.
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