President Trump’s new pharmaceutical tariff policy already threw another wrench in a fast complex drug supply chain, experts asked to be effective in less than a week for more clarity and details in the new policy of the White House.
Announcing that branded or patented drugs would be hit with 100 percent tariff on 1 October, Trump also said that drug manufacturers could avoid penalty if they have a drug manufacturing plant for which the ground is broken, or currently under construction.
It is not clear how many companies can avoid tariffs under that rule, although many drug manufacturers have promised billions in investment in the US under pressure by the Trump administration.
This declaration gives exemption to generic drugs, which are responsible for most of the prescriptions in the US
Medicines produced in the European Union are also not covered by new tariffs, although they are subject to one15 percent tariff,
Health Care Lawyers said that the new policy raises many questions for those expecting to avoid tariffs.
“If you already have an existing American manufacturing facility? Do you have been exempted because you already have a domestic footprint, or you should somehow expand that ability,” Saumi Saha said, a pharmacist, lawyer and government affairs of the government affairs, health care reform company Premier Inc.
“And if you believe that anyone is exempted with any American footprint, the question raises how many branded manufacturers have no American footprint and is this the right effect?”
Saha said that this policy required clarity, questioning whether companies only need to manufacture one of their products for all their medicines, or whether it is being implemented by the case.
Given that Europe’s drug exports can be exempted on the basis of tariff agreement that reached this year and a significant part of drug exports from Asia is generic, the correct impact of this policy remains merry.
But many branded drugs also arise from Asia, especially from Japan, South Korea and China. And while countries like Japan have tariff trade deal, the current agreement gives exemption only to normal drugs.
Due to no protective trade agreement like Europe, it is likely that the Asian drug manufacturers will bear the brunt of the new rule, which was reflected in the market on Friday. America and European Pharmaceutical Stocks remain stable while stableThey slipped in Asia,
Some voices said that they are not sure that they would have a lot of impact, although they said it is difficult to predict because the policy is so low.
“We don’t think there is already a change in uncertain status in the recent announcement of 100% tariff on pharmaceuticals,” said Health Care Managing Director Arthur Wong at S&P Global Ratings. “However, more details are required, such as the least investment, the required time -limit, and the use of outsourced manufacturing.”
Some other issues have been included in the uncertain area facing the industry.
The 1 October 1 time declared for 100 percent tariffs matches closely with several other important dates related to federal drug pricing control. Drug manufacturers in the US have to commit to Trump’s most preferred nation executive order till 29 September, which will require companies to sell their drugs to America that they sell the least worldwide.
The negotiations for the second round of Medicare talks under inflation reduction act (IRA) are also going to end next week, and while the impact of that action is more delayed, there are areas of overlap.
According to a former federal trade officer, it would not be easy to implement such instructions, especially the provision of the need for convenience development in the US
“How do you apply it on Earth? How do you ensure that it is clear at the time of imports? [Harmonized Tariff Schedule] The code between the code and the generic does not distinguish, “said Monica Gord,” Managing Director of Craul Global Advisors and former Special Assistant of former President Biden for manufacturing and industrial policy.
He said, “Implementing it is going to be incredibly challenging, but from at least an immediate effect, the fact that it appears to exclude the generic, is incredibly important and is likely to reduce the effect on American patients,” he said.
It is not clear whether this order was informed by Section 232 investigation or not.
Earlier this year, the Department of Commerce takes an initiativeInvestigationUnder national security effects of imports of pharmaceuticals and pharmaceutical components. This was done under Section 232 of the 1962 Trade Extension Act, which empowers the President to restrict imports that can endanger national security.
If this action was inspired by 232 investigation, the resulting tariffs may become stronger.
“If this section 232 is being done under tariff, the possibility is the most glued power and longevity, as a formal investigation was done,” Saha said. “A formal public notice and a period of comment was more difficult to challenge them, given that the process that comes to this conclusion.”
Saha estimated that the first 10 drugs selected for Medicare Dialogue, which are priced at the January 1, 2026, may be more prone to affected by Trump’s new tariff policy. IRA excludes drugs that contain generic or biosimiller on the market by medicare negotiations, meaning that all they have been selected are branded and patented.
Washington, DC is also struggling with a possible government shutdown on 1 October next week as the Congress is unable to reach an agreement on a constant resolution.
If the federal government closes, tariffs may still be effective, although deployment can be vandalized.
“They are definitely still viable,” Gordeman said. “The big question is who is still working? There are national security exceptions, for which who are for federal workers and what work continue to do.”
“I think the question gets this: If we are in a shutdown position, will those people who will clarify how it is going to apply, are they working?”
