April 7, 2026

100% On Brand: U.S. Imposes New Tariffs (and Key Exemptions) on Patented Pharmaceuticals

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On April 2, 2026, President Trump announced a Proclamation, “Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients into the United States” (the “Proclamation”), which will impose 100% tariffs on patented pharmaceutical products and key inputs, marking one of the most aggressive trade actions affecting the life sciences sector. While the action is significant, the practical impact will turn on exemptions, timing, and company-specific arrangements, including carve-outs for generics, specialty products, and certain jurisdictions, as well as the potential for reduced or eliminated tariffs tied to U.S. onshoring and pricing commitments.

Companies involved in the manufacture, importation, or distribution of pharmaceutical products should immediately assess supply chain exposure, product classifications, and eligibility for potential relief.

Background

The life sciences industry was largely spared from certain tariffs imposed in 2025 due to product-specific exemptions, including those under the International Emergency Economic Powers Act (IEEPA), that were recently struck down by the U.S. Supreme Court. 1 However, in April 2025, the U.S. Department of Commerce (Commerce) initiated an investigation pursuant to Section 232 (“Section 232”) into whether imports of pharmaceuticals and pharmaceutical ingredients into the United States pose a national security risk. 2

On September 25, 2025, President Trump announced in a brief Truth Social post that the United States would impose a 100% tariff on branded pharmaceutical products, subject to exceptions for companies investing in U.S. manufacturing. The announcement did not provide further detail and was not implemented at the time, as the Administration instead pursued company-specific negotiations involving pricing and onshoring commitments. The Proclamation significantly advances the Administration’s earlier efforts, shifting from proposed tariffs to a formal tariff regime with defined scope, timing, and pathways for relief.

The Proclamation

The Proclamation concludes that U.S. reliance on imported patented or branded pharmaceuticals poses a national security threat, and imposes a 100% ad valorem duty rate on covered patented pharmaceuticals and associated pharmaceutical ingredients.

The scope of covered items is set out in Annex I and includes a broad range of finished drugs, biologics, and related inputs classified under Chapters 29 and 30 of the Harmonized Tariff Schedule (HTS), such as specialized compounds (e.g., hormones, vitamins, alkaloids, antibiotics), biologics, blood, and cell therapy products, vaccines, and drugs.

For covered products imported by 17 identified large pharmaceutical companies in Annex III of the Proclamation, the tariffs will become effective on July 31, 2026 (i.e., 120 days after the issuance of the Proclamation). For all other importers, the new 100% tariffs will become effective on September 29, 2026 (i.e., 180 days after the Proclamation).

The Proclamation includes broad exemptions, including for generic pharmaceuticals, U.S.-origin products, and certain categories of “specialty products,” which in many cases will dictate whether companies face the full 100% tariff rate.

1. What items are subject to the 100% ad valorem tariff?

The 100% ad valorem duty rate applies to “patented pharmaceutical products and associated pharmaceutical ingredients” enumerated in specified new HTS provisions. Finished drug and biologic products, and the ingredients used to manufacture them, including active pharmaceutical ingredients (API) and key starting materials, are subject to the tariffs.

2. What is a “patented pharmaceutical” for purposes of the Proclamation?

Annex I of the Proclamation defines “patented pharmaceutical articles” as pharmaceutical articles that are subject to a valid, unexpired U.S. patent and are listed in the FDA’s Orange Book or Purple Book, together with the active pharmaceutical ingredients and key starting materials for such pharmaceutical articles.

By contrast, “generic pharmaceutical articles,” which are exempted from the tariffs, are pharmaceutical articles that are not subject to a valid, unexpired U.S. patent and are off exclusivity, including generic drugs or biologics approved pursuant to an abbreviated new drug application, a section 505(b)(2) new drug application that has been deemed therapeutically equivalent to a reference drug, a biosimilar biologics license application, or an application for an authorized generic drug or authorized biological product.

3. What products are exempt from the new tariffs?

The Proclamation and associated annexes contain a wide range of full exemptions for certain categories of products:

• Generic Pharmaceuticals: As noted, generic pharmaceutical products are currently exempted, although the Proclamation indicates that in one year (i.e., by April 2027), Commerce shall inform the president as to whether further tariffs targeting generics may be warranted.
• Exempted Articles: Annex IV of the Proclamation includes a larger list of HTS codes—526 in total—and includes a broad range of raw materials, intermediates, and finished products.Any item contained within Annex IV is subject to a 0%, rather than 100%, tariff.
• U.S.-Origin Products: The Proclamation clarifies that imports of United States-origin pharmaceutical products are not subject to these new tariffs, “at this time.”
• Specialty Products: The Proclamation provides special treatment for (i) drugs and associated ingredients where all approved indications are designated as orphan pursuant to the Orphan Drug Act, 21 U.S.C. 360aa et seq., and its implementing regulations; (ii) nuclear medicines; (iii) plasma-derived therapies; (iv) fertility treatments; (v) cell and gene therapies; (vi) antibody drug conjugates; (vii) medical countermeasures related to chemical, biological, radiological, and nuclear threats; (viii) other specialty pharmaceutical products to be identified by Commerce, or (ix) pharmaceutical products for animal health. In each case, the duty rate is 0%, if the U.S. government makes relevant findings, as described in more detail below.

4. What countries are afforded more favorable duty rate treatment?

Throughout the course of 2025 and 2026, the United States negotiated a range of trade deals, in which non-U.S. countries secured not only favorable duty treatment under existing tariffs (e.g., those imposed at the time pursuant to IEEPA), but also in connection with future Section 232 tariffs. The Proclamation honors those commitments, giving a 10% tariff rate to United Kingdom products (with the possibility to drop to 0% depending on U.S.-UK pharmaceutical pricing negotiations), and a 15% tariff rate to the European Union, Japan, South Korea, Switzerland, and Liechtenstein (unless a lower rate applies).

5. What companies are exempt?

Companies that enter into qualifying agreements with the U.S. government—particularly involving onshoring commitments and Most Favored Nation (MFN) pricing—may qualify for substantially reduced or eliminated tariffs. For companies that enter into agreed upon onshoring commitments, the duty rate is 20% rather than 100%, though the rate will rise to 100% in four years (i.e., in 2030). For companies that are eligible for this treatment but have also reached deals with both Commerce and the U.S. Department of Health and Homeland Security (HHS) in respect of MFN pricing—including 13 companies listed in Annex II (who reached agreements between December 2025 and March 2026)—the duty rate is 0% rather than 100%, though the 0% rate will expire as of January 20, 2029. Companies are eligible for either duty reduction if they have or are “likely soon to have (e.g., based on agreements in principle)” such agreements.

Companies with qualifying onshoring plans will be required to submit periodic reports to the secretary regarding their progress toward fulfilling onshoring milestones, and the favorable duty rates can be changed if the U.S. government determines that companies have not abided by the terms of the relevant agreements.

Commerce and HHS are to establish criteria for acceptable onshoring plans, to be published in the Federal Register, which shall be subject to approval, monitoring, and enforcement by Commerce (including periodic/milestone reporting). The Proclamation does not explain whether, or how, FDA will be involved in supporting the execution of companies’ onshoring plans – for example, whether companies with approved plans will qualify for the FDA’s PreCheck program announced in August 2025 or otherwise receive accelerated drug application review times for moves to U.S. manufacturing facilities.

6. How will the administration identify what “specialty products” are exempt?

As described above, certain identified “specialty products” will be subject to a 0% duty rate. For these products, the Secretary of Commerce—in consultation with the United States Trade Representative and HHS—must have made a formal determination, to be published in the Federal Register, that such items (1) are products of a jurisdiction that has a current or forthcoming trade and security framework agreement as referenced in Executive Order 14346 of September 5, 2025 (Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements), or (2) meet an urgent United States health need. Absent such a determination, this duty-free treatment does not apply. It is unclear at this stage when the Secretary of Commerce will recognize this exemption in the manner contemplated by the Proclamation for particular exempted products or categories of products.

The timing and scope of these determinations remain uncertain, creating ambiguity for companies seeking to rely on these exemptions.

7. How will the tariffs be calculated?

The Proclamation also clarifies how the new tariffs interact with existing customs rules:

• Generally speaking, the duty rate shall be the Column 1 Duty Rate plus the new Section 232 tariff, unless the Column 1 Duty Rate is greater than 100%, in which case that duty rate applies.
• If multiple duty rates under the Proclamation apply to a given article, the lower of such duty rates will be the applicable one.
• Goods that are eligible to be entered duty free under Chapter 98 of the HTS (Special Classification Provisions) remain eligible for duty-free treatment, notwithstanding the new Section 232 tariffs.
• Duty drawback remains available.
• If goods are subject to anti-dumping or countervailing duties, those continue to apply (in addition to any other duties).

Key Takeaways

The imposition of 100% tariffs on patented pharmaceutical products and ingredients represents a sweeping shift in the U.S. trade landscape for the life sciences sector, with implications for pricing, sourcing and supply chain strategy.

While the headline tariff rate is significant, the ultimate impact will vary widely depending on product classification, eligibility for exemptions, and the ability to access reduced-rate pathways tied to trade agreements or onshoring commitments.

Despite these mitigating factors, if the tariffs are imposed, they could significantly increase costs of branded drugs for manufacturers, patients, and payors.

Companies should take the following immediate steps:

• Identify which products and inputs fall within Annex I (subject to tariffs) versus Annex IV (exempt products); and
• Evaluate potential exemption categories, including specialty product designations, favorable country treatment, and onshoring or MFN-based tariff relief. We will continue to monitor implementation developments, including guidance from relevant agencies, to assist with exposure assessments, exemption analysis, and supply chain planning .

1. For more details on this decision, please see https://www.ropesgray.com/en/insights/alerts/2026/02/supreme-court-strikes-down-ieepa-tariffs-key-takeaways-and-implications-for-importers.
2. Section 232 investigations typically result in the imposition of product-specific tariffs, and in 2025 and 2026, the U.S. has imposed Section 232 tariffs on product categories such as steel, aluminum, automobile parts, and lumber. Section 232 tariffs are unaffected by the Supreme Court decision striking down the IEEPA-based tariffs. Send Print Report ### Related Posts

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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