100% pharma tariff now covers all importers after Sept. 29 phase-in
The Section 232 duty on patented drugs and their ingredients, first applied to large companies in July, now reaches every importer. Generics are still exempt, but rates vary sharply by country and company.
Article summary
- Why it matters: Healthcare systems, distributors and life-sciences procurement teams now face Section 232 duties on patented medicines from every supplier, not just the largest manufacturers. The effective rate ranges from 0% to 100%, depending on where the product is made and what deals its maker has struck with Washington.
- What to do first: Map your formulary by origin and maker. The same molecule can carry very different duties depending on the manufacturer’s country and whether it holds an onshoring or pricing agreement.
- Ask suppliers directly which rate applies to each product and whether they intend to pass it through. Get the answer in writing.
- 100%
- default duty on patented drugs and APIs
- 15%
- rate for EU, Japan, Korea, Switzerland
- Sept. 29
- phase-in reached all importers
- 0%
- generics and biosimilars, for now
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The details
The proclamation, issued April 2, 2026 under Section 232 of the Trade Expansion Act, cites national security risk from reliance on foreign production: about 53% of patented pharmaceutical products and 85% of patented active ingredients, by volume, are made abroad. It phased in the tariff on patented pharmaceuticals and their associated active pharmaceutical ingredients (APIs):
- July 31, 2026: Large companies named in the proclamation’s annex.
- Sept. 29, 2026: All other companies and importers.
The headline rate is 100% of value, but most trade will see something lower, according to summaries by Baker Donelson and International Trade Insights:
| Situation | Rate |
|---|---|
| Default | 100% |
| EU, Japan, South Korea, Switzerland, Liechtenstein | 15% (generally) |
| United Kingdom | 10%, potentially 0% under a bilateral deal |
| Company with a Commerce-approved onshoring commitment | 20%, rising to 100% on April 2, 2030 |
| Onshoring commitment plus an HHS most-favored-nation pricing agreement | 0% through Jan. 20, 2029 |
Excluded: generic drugs, biosimilars and their ingredients (Commerce will revisit this after a year), plus orphan drugs, plasma-derived therapies, cell and gene therapies, antibody-drug conjugates, nuclear medicine, fertility treatments, medical countermeasures and animal health products, among others. U.S.-origin products aren’t covered, and drawback is available.
How the annexes work. The proclamation’s annexes decide which rate applies, so procurement teams need to know them:
| Annex | What it contains | Effect |
|---|---|---|
| Annex I | Covered patented products and their APIs | Subject to the 100% baseline unless another rule applies |
| Annex II | Companies with tariff agreements signed before the proclamation | 0% on their patented products and APIs |
| Annex III | Large companies named for the earlier date | Duty applied from July 31, 2026 |
| Annex IV | Products at 0% under this action | Also exempt from the earlier Section 122 surcharge; may be updated |
The Commerce Department and HHS have said they will offer pathways for more companies to sign onshoring and most-favored-nation pricing agreements, but have not published the approval criteria. That means a supplier’s rate can change mid-contract when it signs a deal.
Two details that change which rate applies. The phase-in dates were set at 120 and 180 days after the proclamation, according to International Trade Insights. And the 0% treatment for the specialty categories, such as orphan drugs and cell and gene therapies, applies only if the product comes from a jurisdiction with a recognized trade deal or meets an urgent public health need, so an exclusion on the list does not guarantee 0% for every source. The proclamation does not define “patented product,” and the Annex I product list is where classification questions will be settled. The White House issued a fact sheet with rates, covered products and implementation details.
One product, five possible rates
The same patented product can carry very different duty depending on who makes it and where. On a shipment with a $1 million customs value:
| Situation | Rate | Duty |
|---|---|---|
| Default | 100% | $1,000,000 |
| Onshoring commitment approved by Commerce | 20% | $200,000 |
| Made in the EU, Japan, South Korea or Switzerland | 15% | $150,000 |
| Made in the United Kingdom | 10% | $100,000 |
| Onshoring commitment plus HHS pricing agreement | 0% | $0 |
These are our calculations. In practice, most large manufacturers have either a country rate or a company agreement, so the 100% default mainly hits smaller suppliers without either. That is the group newly covered since Sept. 29, and the reason procurement teams should check rates supplier by supplier rather than assume a single figure.
Three dates to put in your contract calendar
| Date | What changes |
|---|---|
| About April 2027 | Commerce reassesses the generics and biosimilars exemption |
| Jan. 20, 2029 | The 0% rate for companies with both onshoring and pricing agreements ends |
| April 2, 2030 | The 20% onshoring rate rises to 100% |
Questions to ask your pharmaceutical suppliers
- Which of your products we buy are on Annex I, and from which country of manufacture?
- Do you have, or are you negotiating, an onshoring or pricing agreement, and when would it change our rate?
- How will you pass through the duty: as a separate line, a list-price change or a contract adjustment?
- If your rate falls because of an agreement, will you pass the reduction back to us?
- Which U.S.-made alternatives do you offer for products we buy from overseas sites?
What procurement teams should do
- Map your formulary by origin and maker. The same molecule can carry very different duties depending on the manufacturer’s country and whether it holds an onshoring or pricing agreement.
- Ask suppliers directly which rate applies to each product and whether they intend to pass it through. Get the answer in writing.
- Review GPO and distributor contracts for price-adjustment clauses tied to duties or “changes in law.”
- Model 2030. Onshoring-based reductions step up to 100% in April 2030, so long-term contracts should account for that cliff.
- Don’t assume generics stay exempt. The exemption is subject to review in about a year.
What to watch next
- Generics review. Commerce has said it will revisit the generics and biosimilars exclusion after a year, which would bring far more volume into scope.
- Onshoring deals. More company-specific agreements like BD’s could lower rates for individual suppliers; track which of your suppliers sign one.
- Pricing pass-through. Watch for distributor surcharges and contract price adjustments tied to the tariff in Q4 renewals.
The bigger picture
Pharmaceuticals were long treated as off-limits for tariffs because of patient-access concerns. The structure of this action, with steep default rates and large discounts for companies that build U.S. capacity or agree to pricing terms, shows the tariff being used as negotiating leverage as much as trade protection. Expect supplier-specific rates to change as more companies sign agreements, which makes this a category to re-check quarterly. Key dates are in our Tariff & Trade Deadline Tracker.
Questions procurement teams are asking
Who pays the Section 232 pharmaceutical tariff?
Since Sept. 29, 2026, all importers of covered patented drugs and their active ingredients, not just the large companies named in July.
Are generic drugs covered by the pharma tariff?
No. Generics, biosimilars and their ingredients are excluded for now, and Commerce has said it will revisit that after a year.
Is the pharma tariff always 100%?
No. Rates are lower for the EU, Japan, South Korea, Switzerland and the UK, and for companies with approved onshoring commitments.
Why did the U.S. put tariffs on patented drugs?
The proclamation cites national security risk from foreign production: about 53% of patented pharmaceutical products and 85% of patented active ingredients, by volume, are made outside the U.S.
What tariff applies to patented pharmaceuticals imported into the U.S.?
Under the April 2, 2026 Section 232 proclamation, the default is 100%, but most trade pays less: generally 15% for the EU, Japan, South Korea and Switzerland, 10% for the UK, 20% for companies with approved onshoring commitments and 0% for those that also have an HHS pricing agreement.
Are generic drugs subject to the Section 232 pharmaceutical tariff?
Not for now. Generic drugs, biosimilars and their ingredients are excluded, but Commerce has said it will revisit the exemption after about a year.
How we reported this
This story draws on 2 sources, listed below, and reflects figures as reported on October 12, 2026. The sections on why it matters and what procurement teams should do are Procurement Signal analysis. It is not legal or financial advice. See our editorial standards.
