Tariff therapy: Trump nudges pharma cos to make drugs in US or face 100% tariff

The Trump administration said on Thursday it will impose ​100% tariffs on branded pharmaceuticals imported ​into the United States unless manufacturers agree to government drug ​pricing deals or commit to making their products domestically.

The move is intended to push drugmakers to onshore production and cut U.S. prescription drug prices. It offers exemptions and reduced rates through trade ‌agreements, manufacturing commitments ⁠and most-favored-nation ⁠pricing pacts.

Also Read: Sun Pharma most exposed Indian company to Trump's new tariff threat, warns Jefferies


Here are some details:

* The United States will impose a 100% tariff on patented drugs not made in the country and not covered by drug pricing agreements.

* Large pharmaceutical ​companies have 120 days to announce plans to avoid the 100% tariff; smaller companies have 180 days.

* Companies can move manufacturing to the U.S. in exchange for ​a reduced 20% tariff.

* Drugmakers that onshore and ⁠sign most-favored-nation pricing ‌agreements with the U.S. Department of Health and Human Services are exempt from tariffs.

* The U.S. has already agreed to such ⁠deals with 17 drugmakers, of which 13 have been finalized ​and four are being negotiated.

* Tariffs are reduced to 15% ​for drugs produced in the European Union, Japan, South Korea and Switzerland due to existing trade agreements. The U.K. has a separate tariff deal.

* U.S. patients by far pay the most for prescription medicines, often nearly three times more than in other developed nations.

* Trump has been pressuring drugmakers to lower their ‌prices to what people pay in high-income countries under his most-favored-nation drug pricing policy.

* Major drugmakers that have signed deals, which exempt ​them from tariffs for ​three years, include ⁠Pfizer and Eli Lilly among others.

* Many companies, including about half of those represented by industry lobby group PhRMA, have not yet signed deals.

* Industry sources say small ​and mid-sized drugmakers are seeking individual arrangements to avoid tariffs and new pricing rules.

* The Trump administration has previously said generic drugs will be exempt from tariffs.

* More than 90% of medicines sold in the U.S. are generics, according to the U.S. Food and Drug Administration.