US President Donald Trump has signed an executive order imposing steep tariffs on imported branded pharmaceuticals, according to a report by Reuters.
Under the order, patented drugs not produced in the US and not covered by government pricing agreements will face tariffs of up to 100 per cent. The measure is part of a broader push by the administration to reduce prescription drug costs and boost domestic production.
Large pharmaceutical companies have been given 120 days to outline compliance plans, while small and mid-sized firms have 180 days to respond. Companies that commit to shifting manufacturing to the US may qualify for a reduced tariff rate of 20 per cent.
The policy builds on ongoing negotiations led by the US Department of Health and Human Services, which has already secured pricing agreements with several major drugmakers. Firms that sign so-called “most-favoured-nation” pricing deals and relocate production are expected to be exempt from tariffs.
Smaller Firms Face Higher Exposure
While some large companies have already secured exemptions through prior agreements, industry groups warn that smaller players could bear the brunt of the new regime. Industry sources cited in the report said many mid-sized drugmakers are now seeking individual arrangements to avoid steep duties and comply with pricing rules.
The Midsized Biotech Alliance of America cautioned that the order could create an uneven playing field, favouring large pharmaceutical companies with existing deals while putting smaller firms at a disadvantage.
Tariff relief will be available for drugs produced in certain partner countries, including those in the European Union, Japan, South Korea and Switzerland, where lower duty rates will apply under existing trade frameworks. Generic medicines, which account for over 90 per cent of prescriptions in the US, will remain exempt for at least one year.
The US Food and Drug Administration has previously noted that generics dominate the US market, helping keep overall treatment costs lower despite high prices for branded drugs.
The move underscores the administration’s continued focus on aligning US drug prices with those in other developed nations, where medicines are often significantly cheaper.