Shelf of pharmaceutical products.
D3Sign | Moment | Getty images
President Donald Trump announced on Thursday that the US would impose 100% tariff on any branded or patent pharmaceutical product “from October 1.
Trump said that this measure would not be applicable to companies making drug manufacturing plants in the US. He said the discount covers the projects where construction has begun, including sites that have been broken or under construction.
“Therefore, there will be no tariff on these drug products when construction starts,” Trump said in a post. True social,
Branded or patented pharmaceutical products are drugs that are sold under business names and are preserved by patent or other intellectual property, which blocks generic competition until those security ends.
Trump has said that tariffs will encourage pharmaceutical companies to transfer manufacturing operations in the US which is an attempt Ellie lily, Johnson & Johnson, Abbi And others are already chasing at a time when domestic drug manufacturing has dramatically shrunk in the last few decades.
CNBC reached out to major drug manufacturers to comment on tariffs, but did not get immediate response.
Risk to drug supply chain
In 2024, the US import of pharmaceuticals in 2024, according to data from the United Nations Competition Database, increased to $ 213 billion from a decade ago.
The Trump administration started a so -called section 232 in April Investigation In pharmaceutical products, which allows the Commerce Secretary to examine the impact of import on national security. The President similarly used the power that tariffs on other items, such as cars and aluminum.
Tariffs deal with a long -awaited blow for pharmaceutical companies, many of which are pushed back And warned that levy can increase the costs, deitter Investment In the US and in disrupting the supply chain of drug, the patients eventually put at risk.
In Public remarks For the government in May, Elli Lily stated that tariffs “would deprive the manufacturers of the capital required to innovate and invest in investing in the required capital” as they would redirect capital to cushion the effect of the levy. It was one of the hundreds of comments issued by the Department of Commerce in late May, which was in relation to the 232 investigation in the pharmaceutical industry.
Some health policy experts also say that this step may disrupt the drug supply chain at the expense of American patients, increase costs for some treatments, or even increase the lack of drug deficiency to the nation. Drug manufacturers often rely on a global network of manufacturing sites for different stages of the production process.
Principal Drug Policy Principal at AARP’s Public Policy Institute, Leh Parvis told CNBC before the tariff announcement that “he is already pushing very hard to try to reduce those prices,” high -leaflet drug prices in an environment.
He said that “there are many common medicines, especially that may be perhaps to make a decision between the market being batchless and pulled.”
Tariff store
Levies are lower than 250% tariff rate on pharmaceuticals that Trump floated in an interview with CNBC in August “Squalk box.” Trump said he would initially implement a “small tariff” on pharmaceuticals, but then “maximum” in a year and a half, he would increase that rate by 150% and then by 250%.
The industry is already navigating the decline from Trump Proposed drug price policiesThose who argue that drug manufacturers argue that their ability to invest in lower lines and research and development and major vaccine scaptic Robert F. Both the health and human service department under Kennedy Junior are threatened by both.
This is the latest development in Trump’s developed tariff policy, aims to bring back manufacturing in the US
Follow the launch of freshly followed by new duties National security check Announced on Wednesday in imports of robotics, industrial machinery and medical equipment.
The latest probe by the Department of Commerce expands the list of items that can withstand high tariffs to include individual safety equipment such as surgical masks, N95 respirators, gloves and other medical consumables, including syringes and needles.
Any new duties generated by sector-specific investigation will be piled on top of Trump’s country-specific tariffs, although the European Union and Japan have reached agreements that can mold them with additional levies.
Transfer manufacturing
Analysts have expressed concern that it will be difficult to resume production in the country, which will be expensive and may take many years.
BMO Capital Market analyst Ivan Segerman said in a note in April, “Global supply chains are complicated, it is not easy with pharma that it is not easy as tightening the screws in small screws to create an iPhone.”
He said that the tariffs would do “very little to move manufacturing” to come back to the US as companies already have strong operations in the country.
Segarman said that he hoped that most of the large pharmaceutical companies would “set a goal of” waiting for “more permanent manufacturing decisions” by the end of Trump to “.
J&J also in March Announced a new $ 55 billion investment In American manufacturing, research and development and technology over the next four years.
In April, J&J stated that it expects to record $ 400 million tariff spending in 2025, which reflects the already declared levy and does not predict the effects of drug-specific tariffs. This mainly belongs to the company’s medical equipment products, the authorities said on an earning call at that time.
Other companies, including FizerPass Also registered charge In April, Trump announced that related to tariffs.
J&J CEO Jokin Duato echoed the warning of health policy experts.
“There is a reason … why pharmaceutical tariffs are zero. This is because tariffs can cause disruption in the supply chain, causing decrease,” Duto said during the call. He said that adapted tax policies would be a more effective tool to promote American manufacturing capacity of both drugs and medical devices.
Some drug manufacturers, such as Ellie Lily, Bristle myers squib And AbbiTD Cowen analyst Steve Skala said in a note in April, they are in better position than others for weather tariffs, as they have more major manufacturing plants in the US. He said that most of his sites responsible for producing active ingredients in drugs are also in the US.
During this time, Novartis And Rush “Look more in risk” because they have some American plants and a high part of active ingredient sites that are international, Skala said.
