A year after revealing his “Liberation Day” trade policy initiatives, U.S. President Donald Trump is set to announce tariffs of 100% on some pharmaceutical products imported from outside of the country, Bloomberg reports, citing unidentified sources who know about the plan.
There could be exemptions for certain drugs and for treatments for specific disease types, according to the report.
The tariffs would reportedly not apply to companies that have struck Most Favored Nation (MFN) drug pricing deals with the White House. In those agreements, companies generally agreed to make investments in the U.S. and to lower certain U.S. drug prices in exchange for three-year exemptions from the levies. Many drugmakers have also committed to offering some of their products on the government’s direct-to-patient TrumpRx purchasing platform.
While nearly all the world’s largest biopharma companies have made MFN deals with the U.S., many smaller-sized drugmakers have not and could be significantly impacted by the 100% tariff rate.
In February, 10 companies launched the Midsized Biotech Alliance of America (MBAA) to contest the MFN pricing policy. The alliance, which includes biotechs such as Alnylam, BioMarin, Madrigal and Travere, contends that its members don’t have the flexibility to make MFN deals with the administration or the financial wherewithal to build manufacturing facilities in the U.S. Many of these companies have just one or two products on the market.
On Thursday, MBAA spokesperson Alanna Temme said that Trump’s tariff plan “creates an unfair two-tiered system,” which could significantly harm the “innovation engine that keeps America the global leader in medicine.”
“By granting full exemptions only to companies that have already accepted ‘most-favored-nation’ price controls—and leaving midsized innovators who rely on a handful of patented medicines to shoulder the burden—the policy risks undermining the very American biotech companies that drive the majority of new breakthroughs in cancer, rare diseases, and other life-threatening conditions,” Temme added.
Adding to the complex web of tariff implications are deals the Trump administration has made with individual countries and the European Union. These agreements would not be overridden by the new levies, The Financial Times reports.
Citing a draft document with details on the tariff plans, Endpoints News reports that lower tariff rates of 10% to 20% may apply in some instances.
In December of last year, the U.S. struck a deal with the U.K. to exempt drugs and drug ingredients made in the U.K. from tariffs in exchange for a 25% increase on the net price its National Health Service (NHS) pays for novel treatments. On Thursday, Britain agreed to the full text of the deal, which makes it the only country in the world free of U.S. tariffs on medicines.
The administration has also made deals with Switzerland, Japan and the European Union, with the U.S. capping import tariffs on many goods—including drugs—at 15% and largely exempting generic medicines from duties.
Trump’s attempt to invoke the 100% tariff rate is reportedly not affected by the February Supreme Court decision to prohibit his use of emergency powers to impose tariffs.
In January, pharma giants AbbVie and Johnson & Johnson reached agreements with the White House, leaving Regeneron as the lone company not to have made a deal among the 17 that received letters from the administration in July of last year, which urged them to participate in its MFN pricing initiative.