When President Donald Trump rolled out his plan to levy a 100% tariff rate on patented pharmaceutical products and ingredients imported into the United States, it included a provision that drugmakers who had not agreed to Most Favored Nations (MFN) pricing deals but were in the process of moving their manufacturing to the U.S. could apply for a reduced rate on their tariffs.
On Wednesday, the Department of Commerce released a document explaining that companies will have to disclose extensive information about their investments, production plans and compliance commitments in order to secure the 20% exemption.
Companies must submit their onshoring plans, which will then be monitored and enforced by the Secretary of Commerce. The applicants will be required to file periodic reports breaking down their progress on fulfilling their onshoring milestones.
The application also comes with a warning: Companies that are “engaged in fraud” or have “deliberately misled” the government with respect to their onshoring commitments will be subject to reimposition of the 100% tariff rate.
Companies are also urged in the application to onshore as much of their global production “as possible” by January 20, 2029, which is when Trump’s term is over.
Fierce received no immediate response from several companies that have not made MFN deals and are likely to be applicants for the 20% tariff exemption.
In the application, drugmakers must break down which products they are manufacturing, where they are making them and whether they are using contract manufacturers. They will also be required to reveal what portion of their portfolio will be produced onshore, breaking them down by products, volume and value.
The application also asks companies to reveal what percentage of their patented drugs are made with APIs produced in the U.S. and the expected percentage in this category by January of 2029.
The submission deadline is June 12. The Department of Commerce says it will protect the confidentiality of information included in the applications and that the information will be circulated among employees on a need-to-know basis.
As specified in Trump’s executive order, the 100% tariff will go into effect on July 31 of this year for larger companies and on September 29 for smaller drugmakers.
In response to the guidance, consulting firm EY has advised companies to assess their “eligibility for an onshoring agreement and potential tariff savings,” develop “detailed onshoring strategies, including investment and production timelines,” and assemble “required data and documentation across product portfolios and supply chains.”