The Trump administration announced 100 percent tariffs on imported brand-name drugs Thursday, calling it the most consequential action yet to bring pharmaceutical manufacturing back to the United States. The reality is more complicated.
President Trump imposed the tariffs under Section 232 of the Trade Expansion Act, citing national security concerns about U.S. dependence on foreign drug manufacturing. According to the presidential proclamation, the FDA found that 53 percent of patented pharmaceutical products distributed domestically are produced outside the country, and just 15 percent of patented active pharmaceutical ingredients by volume are domestically made. The White House fact sheet claims the tariffs have already spurred $400 billion in new investment commitments from U.S. and foreign pharmaceutical companies.
But the 100 percent number comes with a long list of exceptions. For the 16 large drugmakers that have already agreed to Most Favored Nation pricing deals with the Department of Health and Human Services, the tariff rate is zero through January 20, 2029. Companies that sign only domestic manufacturing agreements pay 20 percent — rising to 100 percent after four years. Products from the European Union, Japan, Korea, and Switzerland face 15 percent. The United Kingdom, which finalized a separate pharmaceutical agreement on the same day, pays nothing on drug exports to the U.S.
The companies paying the full 100 percent are those that have not cut deals and do not qualify for trade-deal rates. The effective tariff on most major brand-name drugs is currently zero.
Generic pharmaceuticals, biosimilars, and their ingredients are exempt entirely — a significant carve-out for an industry where generics make up the vast majority of prescriptions filled in the United States. Orphan drugs and certain specialty pharmaceuticals are also exempt if they come from trade-deal countries or address an urgent public health need.
The tariff timeline gives large companies 120 days to comply, smaller companies 180 days. The administration framed this as leverage for ongoing negotiations.
"By granting full exemptions only to companies that have already accepted 'most-favored-nation' price controls — and leaving midsized innovators who rely on a handful of patented medicines to shoulder the burden — the policy risks undermining the very American biotech companies that drive the majority of new breakthroughs in cancer, rare diseases, and other life-threatening conditions," a spokesperson for the Midsized Biotech Alliance of America said in a statement.
The alliance, a coalition of 10 domestic biotech companies including Acadia Pharmaceuticals, Madrigal Pharmaceuticals, Travere Therapeutics, Alkermes, Alnylam, Ardelyx, BioMarin, Exelixis, Incyte, and Neurocrine Biosciences, was formed in February specifically to push back against MFN pricing policies. The group says its members represent $7 billion in annual U.S. R&D investment, employ 12,000 people, and have brought 30 therapies to market, with nearly 100 more in clinical pipelines. The average time for a midsize biotech to turn a profit, according to the alliance: 25 years.
"They cannot pivot like Big Pharma can," Alanna Temme, the alliance's spokesperson and founder of LMH Strategic Solutions, told Fierce Biotech. "MFN could wipe them off the map."
The midsize companies are now facing a new round of White House negotiations. STAT News reported that the administration is in talks with smaller pharmaceutical companies — those excluded from the first round of MFN deals — offering a pathway to tariff relief in exchange for pricing commitments. The number of companies involved and the timeline for any deals remain unclear.
The UK deal, finalized Thursday, illustrates the structure the administration is constructing. In exchange for zero tariffs on pharmaceutical exports to the U.S., Britain's National Health Service agreed to increase what it pays for novel medicines by 25 percent, through a higher cost-effectiveness threshold set by the National Institute for Health and Care Excellence. The arrangement is set for at least three years.
For the pharmaceutical industry, the $400 billion in announced investment commitments is both the tariff's advertised win and a measure of how much the sector had already moved to placate the administration before the duties took effect. The companies that signed MFN agreements last year — often accepting significant price concessions in exchange for tariff immunity — essentially pre-empted the very tariff now on the books.
The tariffs take effect in 120 days for large companies, 180 days for smaller ones.
† The article should attribute these figures to the alliance: 'The group says its members represent $7 billion in annual U.S. R&D investment, employ 12,000 people, and have brought 30 therapies to market, with nearly 100 more in clinical pipelines.' Add footnote: 'Source-reported; not independently verified.'
†† Either cite the source for the February date, or change to hedge language such as 'recently formed' or 'formed to push back.'
