The Trump administration announced on Apr. 3 a 100% tariff on imports of patented pharmaceutical products and ingredients, though analysts say the impact may be limited for many companies due to various carve-outs and agreements.
The tariffs follow a Section 232 investigation into the pharmaceutical industry, part of efforts to strengthen national security and public health. The new measures will take effect in 120 days for large companies and in 180 days for smaller firms. However, many major companies have already reduced their exposure by reaching Most Favored Nation (MFN) or onshoring agreements with the administration, qualifying them for lower or zero tariffs through January 20, 2029. Companies with only onshoring deals will face a reduced rate of 20%.
Despite these arrangements, some large drugmakers such as Pfizer remain subject to the full tariff after being omitted from the list of those with company-specific agreements. This is despite Pfizer's earlier announcement at the White House about agreeing to MFN pricing. Johnson & Johnson and GSK have also disclosed deals but are still listed among those facing near-term tariffs without specific White House agreements.
Regeneron has not yet finalized an agreement but is expected by analysts to secure an exemption soon. Administration officials indicated that pathways remain open for other companies to reach similar deals in the coming months.
Imports from certain countries including the European Union, Japan, Korea, Switzerland and Liechtenstein will face a lower tariff rate of 15%, while exports from the United Kingdom are exempt under a separate agreement that also adjusts reimbursement thresholds. Orphan drugs, cell and gene therapies, as well as antibody-drug conjugates are fully exempted from tariffs; BMO Capital Markets analysts said these carve-outs could lessen potential negative effects on smaller biotech firms if broader tariffs proceed.
John Crowley, CEO of BIO—the trade group representing small biotechs—said in a statement that tariffs "will raise costs, impede domestic manufacturing and delay the development of new treatments." He added that such policies "work directly against" increasing biotech investment in the U.S.
Generic drugs and biosimilars are entirely exempt from these new levies for now; however, officials stated this decision would be reviewed within one year.
