Christopher Cole

Jason Waite, international trade expert, discusses cross-functional trad compliance as a critical piece to addressing Trump administration tariffs and trade policies and shifting supply chains.

How Pharma Can Build Resilient Supply Chains Amid Trade and Tariff Shifts



In Part 4 of our multi-part interview series, Jason Waite, an international trade expert at Alston & Bird, underscores the urgent need for pharmaceutical companies to build cross-functional trade compliance teams in response to rising global trade tensions—particularly potential Section 232 tariffs. Waite advises that compliance, especially around product origin, classification, and valuation, must be embedded early in R&D, manufacturing, and go-to-market strategies to avoid downstream disruptions. He emphasizes that proactive communication between departments—R&D, finance, logistics, tax, and trade—is a hallmark of companies that successfully navigate trade policy changes.

Waite also addresses uncertainty surrounding country-specific exemptions, noting that while 232 tariffs have historically applied universally, some countries—such as India—may be positioned for favorable treatment due to their role in supplying generics and acting as a potential bridge away from Chinese API dependence. He acknowledges that final tariff frameworks could evolve over time and recommends that companies immediately begin diversifying supply chains, particularly away from China, in anticipation of shifting United States trade priorities focused on domestic production and supply chain security.


What Pharma Manufacturers Need to Know About US Trade Policy Changes

Tariffs & Trade Policy: What to Watch for, Cost Impacts, and Supply Chain Strategies

Trade Policy Shifts: Compliance and Cost Strategies for Pharma

For over 25 years, Jason Waite has advised clients on all regulatory aspects of international trade and investment, including customs and trade agreements, export controls and sanctions, and related policy matters. Jason conducts internal investigations and compliance self-assessments, develops internal trade compliance and training programs, represents clients in audits and origin verifications, and guides clients through voluntary disclosures of actual and potential import and export violations. Jason has significant experience representing clients that are the subject of government investigations involving alleged violations of the export, import, and economic sanctions regulations. In transactional and strategic planning matters, Jason conducts international trade compliance due diligence, negotiates trade compliance responsibilities among parties to transactions, and develops supply chain optimization and global customs planning strategies. He regularly advocates before agencies in Washington for favorable advance rulings, advisory opinions, and commodity jurisdiction and classification determinations, and handles complex export licensing matters.

He is a frequent speaker at seminars and conferences on international trade topics and has been recognized in 

*Editor’s Note: This transcript is a direct, unedited rendering of the original audio/video content. It may contain errors, informal language, or omissions as spoken in the original recording.

I'm not sure anybody has successfully navigated it yet, 'cause the waves are still coming over the side of the boat here on us. But I do think that a trade compliance management team that is cross-functional, where there are, effective communication channels between people in the R&D teams, the manufacturing teams, tax, finance, sales, logistics, these cross-functional teams usually overseen and coordinated by trade compliance professionals, this is a hallmark of successful trade management organizations that we've seen. 

Of course, as I've said before, paying attention to these key issues like origin, classification and value, and doing it from the outset, like building it into the development process, building it into the go-to market process, making sure that somebody from the trade compliance function or wherever it's housed, you know, the function that's going to be responsible for managing compliance and duty burdens, building that into early stages of particular projects so that the impact of duty can be assessed from the outset of a particular development project and of a manufacturing plan or a go to market strategy.

These are all best practices that we've seen be effective, and I think that they'll continue to be.

Absent a country specific deal, 232 tariffs are expected to apply equally to all countries. That's how they've applied in the past for steel and aluminum and automotive, right? That's how these 232 cases have proceeded. They apply equally to all countries, so it seems, at first glance, unlikely that there will be different impacts for different geographies or different countries.

However, as I said before, there does seem to be a recognition by the administration that this market is more complicated, that building out domestic production and supply chains is a challenge. There are certain economic realities that that faces. So, as I said, I think it's possible that you might see some differentiation.

We just have to see how that comes about. And it's even possible that you might not see that when it's announced, but that it could be over time, it could evolve. The president can change. The president could announce a program on August 1st and it could be changed later. So India reportedly has not received a tariff letter, a general letter on the reciprocal tariffs.

They are reportedly one of the countries that's close to reaching an agreement with the United States or some type of a deal. And of course, everybody knows India is a major supplier of generic medicines to the US market. And I think it's also recognized that it does offer a bridge to transition supply chains away from China, right?

So some have asked and advocated for this administration to recognize this and try to carve out, you know, maybe accommodations there. There are good policy arguments like the ones I just hinted at to provide some leeway to India. And it's no secret that an objective of these tariffs is to reduce reliance on China for APIs and medicines.

There's also an overarching objective to spur more US domestic production. But maybe it needs to take a couple steps and maybe diversifying away from China is step one and rebuilding US production is step two. And so it's possible there could be some accommodation made for India.

I think everybody's kind of figured this out by now, but certainly we suggest that companies be diversifying their supply chains outside of China. Beyond that, I think we just have to wait and see whether any countries enjoy any kind of better treatment than others when it comes to these tariffs as they get announced sometime soon.

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Cross-functional trade compliance planning is critical as pharma braces for broad 232 tariffs and shifting United States-China-India supply dynamics.

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Despite extensive regulatory engagement throughout the development process, a growing number of companies are encountering chemistry, manufacturing, and controls (CMC) and analytical deficiencies that result in complete response letters (CRLs) from FDA (1-3). These setbacks, often surfacing late in the review cycle, underscore a critical disconnect between sponsor expectations and evolving FDA standards, including as they relate to assay reproducibility, validation, and tech transfer readiness.

Earlier this week, FDA doled out a CRL to Replimune, a clinical-stage biotech company focused on oncolytic immunotherapies. The unexpected response to the company’s Biologics License Application (BLA) for RP1 (vusolimogene oderparepvec) in combination with nivolumab for the treatment of advanced melanoma took the company—and biotech investors—by surprise. After all, the drug was on the accelerated approval pathway and had received breakthrough therapy designation and priority review. In reaction, Replimune CEO Sushil Patel, PhD, said, “We are surprised by this FDA decision and disappointed for advanced melanoma patients who have limited treatment options as highlighted by the granting of breakthrough status at the time we provided the IGNYTE primary data [1]. The issues highlighted in the CRL were not raised by the agency during the mid- and late-cycle reviews. Additionally, we had also aligned on the design of the confirmatory study. We strongly believe that RP1 in combination with nivolumab can bring substantial benefit to advanced melanoma patients.”


Another unexpected late-stage denial from FDA came to Capricor Therapeutics just 11 days earlierregarding its BLA for deramiocel, the company’s experimental treatment for cardiomyopathy associated with Duchenne muscular dystrophy (DMD). “While this was an unexpected decision by the FDA, we remain committed to the DMD community to get Deramiocel through the approval process,” said Capricor CEO Linda Marbán, PhD (2). Marbán also noted that the company followed FDA “guidance throughout the process,” adding that “prior to the CRL, the review had advanced without major issues, including a successful pre-licensure inspection and completion of the mid-cycle review.”


“I wonder if part of the problem is that many biotechs do not have sufficient experience in-house, and rely on contract organizations,” said 

 Editorial Advisory Board member Chris Moreton, PhD, VP, Pharmaceutical Sciences, FinnBrit Consulting, from his perspective as a consultant for various industry companies over the years. “However, the contract staff may not be sufficiently familiar with the details of the project they are working on. Thus things fall between the cracks, so to speak.”

These CRLs come amid several big changes at FDA, including an unprecedented posting on July 10 

 issued between 2020 and 2024 for drug and biologic applications that were not approved during their initial review cycle. In March, FDA’s then-acting commissioner of Food and Drugs, Peter Marks, the director of FDA’s Center for Biologics Evaluation and Research, 

, pointing to an “unprecedented assault on scientific truth” that “adversely impacted public health” and the current administration’s concerns over vaccine safety in his resignation. In June, Secretary of Health and Human Services Robert F. Kennedy (RFK) Jr. 

announced the dismissal of all 17 members of the Advisory Committee on Immunization Practices

 (ACIP), a Centers for Disease Control and Prevention (CDC)-affiliated body responsible for guiding vaccine policy in the US. Then, earlier this week, RFK Jr. authorized the (newly appointed) ACIP recommendation to remove thimerosal, a mercury-based preservative, from all influenza vaccines distributed in the US, 

, including from those who say the anti-vaccine community’s long-held, oft-repeated contention that there is a link between thimerosal and occurrences of autism and other neurodevelopmental disorders in children is false. Plus, on Monday, FDA appointed George Francis Tidmarsh, MD, PhD, as the new director of the agency’s Center for Drug Evaluation and Research, which is tasked with ensuring the safety and efficacy of drugs in the US. The impacts of these changes on CRLs, the FDA's approval process, and the pharma industry overall are poised to be big but remain to be fully seen.

Guidance is not approval: The limits of early FDA feedback

It’s easy to interpret early-stage FDA feedback—received during pre-IND, pre-NDA, or mid-cycle Type C meetings—as a reliable indicator that their analytical approach or manufacturing plan is on firm regulatory footing (1-3). However, such guidance is non-binding and frequently based on limited preliminary data. As the FDA reviews a full submission and assesses integrated data from clinical and manufacturing domains, it may revise its interpretation of adequacy.

This risk is heightened when clinical results are modest, or when dealing with novel modalities such as viral vectors or gene therapies, which lack established regulatory precedents. The FDA has emphasized that complex products demand rigorous manufacturing control strategies and robust CMC data to ensure consistency, safety, and efficacy, especially as these therapies move toward late-stage development and licensure (4,5).



 Editorial Advisory member Board Henrick Johanning, senior VP, Quality & Strategy, Epista Life Science, echoed these thoughts, saying "Late-stage FDA rejections, even after seemingly smooth submissions and inspections, underscore that 'guidance' is not approval. Too often, analytical methods or tech transfer plans that passed early scrutiny collapse under the weight of commercial-scale expectations. The lesson is clear: CMC rigor and lifecycle planning must be treated—as I see it—as front-line regulatory strategy, not a post hoc technical detail."

Assay variability and method drift during scale-up

A recurring source of CRLs involves discrepancies in analytical assay performance, including in potency, purity, or impurity characterization methods (6-8). Problems arise when sponsors fail to adequately control for inter-laboratory variability, or when methods validated under early-stage conditions fail to perform consistently at commercial scale.

In some cases, sponsors transition assays between development phases or contract manufacturing organizations without fully bridging the methods. This may lead to discrepancies that obscure whether product differences are attributable to assay variability or actual quality deviations. For instance, the FDA’s CRLs for certain advanced therapies have cited lack of assay comparability and insufficient method validation at commercial scale (9-11).

Specific weaknesses flagged in recent CRLs include (12):

Unclear linkage between assay outputs and clinical effectiveness

Lack of justification for assay sensitivity (LOD/LOQ)

Use of different assay formats across phases without bridging or revalidation studies

Tech transfer weaknesses exposed under regulatory review

Even when clinical data appear positive, tech transfer gaps can derail a marketing application. The FDA increasingly inspects the coherence between the submitted CMC package and the actual state of commercial readiness (13). It’s very likely why 74% of CRLs issued from 2020 to 2024 cited quality or manufacturing (CMC) deficiencies (14).

Tech transfer missteps include differences in process parameters, raw materials, equipment, or control strategies between clinical and commercial sites, none of which are uncommon when outsourcing is involved (15). Without detailed comparability protocols and analytical bridging data, the FDA may question whether the clinical product is equivalent to the commercial one. This uncertainty is particularly damaging for biologics, where minor process changes can influence product structure or function.

FDA's Office of Pharmaceutical Quality has emphasized that a well-characterized, well-documented, and consistent manufacturing process is essential to ensure that efficacy and safety observed in clinical trials will translate to marketed product batches (16).

Incomplete process transfer or insufficiently documented process changes have led to significant delays for several companies (17,18). For example, changes in process parameters—such as fill-finish specifications or facility equipment—without aligned documentation or sufficient bridging led to regulatory requests for additional data, sometimes only discovered in late review cycles, resulting in extended reviews or CRLs.

Interpreting FDA language: When "inadequate evidence" means CMC

In CRLs, the FDA may not always explicitly identify manufacturing shortcomings. Instead, sponsors often receive general statements citing inadequate evidence of effectiveness or trials being not adequately interpretable (1,2), similar to the feedback that Replimune received. However, such language can be a proxy for deeper concerns about assay reproducibility, batch consistency, or process control.

While the agency officially cited trial heterogeneity in Replimune’s CRL for RP1, it’s possible that analytical variation across patient subgroups may have compromised the agency’s confidence in the submitted data. Without robust assay performance or clear comparability across lots, even well-conceived trials can appear inconclusive.

This underscores the need to interpret CMC-related risk not just through the lens of assay design, but also in terms of how variability is managed, explained, and documented throughout the product lifecycle (Table).

Table: Key Risk Points in Analytical & Tech Transfer That Invite CRLs

Given the increasing complexity of modern therapies and FDA’s shifting standards, companies are well advised to embed CMC excellence into every phase of development:

Simulate commercial-scale conditions early in validation and comparability planning. Waiting until NDA to finalize CMC strategy is a high-risk gamble.

Implement assay lifecycle management tools to track drift, inter-lab variability, and trending across sites and tech transfer milestones.

Develop comparability protocols upfront, not reactively. The FDA expects a clear rationale and data package whenever process or site changes occur.

Maintain rigorous documentation of regulatory communication

 Misinterpretation of conditional feedback is a common—and preventable—pitfall.

Conduct pre-submission gap assessments or internal mock reviews. Third-party audits or cross-functional CRL simulations can flag weak spots before FDA does.

CMC is no longer a background concern; it is now a front-line risk factor for product approval. As FDA expectations tighten and more applications undergo heightened scrutiny, especially for complex or expedited pathways, manufacturing and analytical strategy must be treated as a core part of clinical success. Sponsors that invest early in robust assay validation, comparability, and tech transfer readiness are better positioned to avoid both the financial and reputational costs of a CRL.

Replimune Receives Complete Response Letter from FDA for RP1 Biologics License Application for the Treatment of Advanced Melanoma. Press Release

Capricor Therapeutics Provides Regulatory Update on Deramiocel BLA for Duchenne Muscular Dystrophy

Capricor Plans for Deramiocel Resubmission After FDA Rejection

Integrated Quality Assessment: Drug Product

Lurie, P. Comparison of Content of FDA Letters Not Approving Applications for New Drugs and Associated Public Announcements from Sponsors: Cross Sectional Study. 

Beware of BIMO: Complete Response Letter, Warning Letter and Shareholder Lawsuit Follow FDA Data Integrity Findings

Complete Response Letters Due to Failed PAIs – More to Come

ARM-USP Workshop “Comparability in Cell & Gene Therapies” Final Report

Guidance for Industry: Potency Tests for Cellular and Gene Therapy Products

Comparability: What We Can Learn from the Review of Advanced Therapy Medicinal Products

FDA’s Pre-Approval Inspection (PAI) Program and How to Prepare for A Successful Outcome

Manufacturing Cell and Gene Therapies: Challenges in Clinical Translation.

Use of Real-World Evidence to Support Regulatory Decision-Making for Medical Devices Guidance for Industry andFood and Drug Administration Staff

Top 5 Reasons Tech Transfer Keeps Breaking… And What We Can Do About it

Articles

A growing number of companies are receiving complete response letters (CRLs) from the FDA due to chemistry, manufacturing, and controls (CMC) and analytical deficiencies. These issues often arise late in the review cycle, highlighting a disconnect between sponsor expectations and FDA standards. Recent cases involving Replimune and Capricor Therapeutics illustrate the impact of inadequate assay validation, tech transfer gaps, and misinterpretation of FDA guidance. To mitigate CRL risk, companies should prioritize CMC excellence, simulate commercial-scale conditions early, and maintain rigorous documentation throughout the development process.

Many companies face FDA complete response letters due to ongoing chemistry, manufacturing, and controls, or CMC, and analytical issues despite early regulatory guidance. Review key risk points in analytical and tech transfer to better ensure commercial readiness.

CMC and Analytical Gaps in CRLs: Why They Persist Despite FDA Guidance and How You Can Position Yourself for Success

Jason Waite, international trade expert, discusses higher drug costs, delayed launches, and compliance risks faced by US pharma companies in light of proposed sectorial tariffs from the Trump administration.



In Part 3 of our multi-part interview series, Jason Waite, an international trade expert at Alston & Bird, outlines how proposed sector-specific tariffs on pharmaceutical products could significantly disrupt the United States drug development landscape. He explains that emerging biopharma companies, especially those in early clinical or reimbursement stages, may struggle to absorb the increased costs associated with imported drugs and ingredients. Waite warns that these cost pressures could slow development timelines, reduce return on investment, and limit market access. He also highlights the broader industry concern that a sector long exempt from substantial tariff burdens is now being forced to adapt to a fundamentally new cost and compliance environment.

Waite further emphasizes the need for pharmaceutical companies to quickly build internal capabilities in customs compliance, including tariff classification, country of origin documentation, and accurate customs valuation. He introduces the "first sale for export" doctrine as a potential cost-saving tool and urges companies to review and strengthen their import controls and compliance frameworks. As the tariff policy’s scope remains uncertain, he stresses that firms must prepare for enforcement and audit risks while simultaneously identifying lawful ways to optimize supply chain transactions. The interview underscores a growing urgency within the pharmaceutical sector to adjust to evolving trade policies that could reshape their operational and financial planning.

Part 1 - What Pharma Manufacturers Need to Know About US Trade Policy Changes

Part 2- Tariffs & Trade Policy: What to Watch for, Cost Impacts, and Supply Chain Strategies

, and look for additional segments on how to mitigate pricing and development timeline impacts, compliance risks to monitor in this shifting trade environment, how to prepare for related potential audits or enforcement actions, best practices to navigate global trade disruptions, and affects on certain manufacturing geographies for outsourcing.

*Editor’s Note: This transcript is a direct, unedited rendering of the original audio/video content. It may contain errors, informal language, or omissions as spoken in the original recording.



I haven't seen it yet, but there's certainly talk that, you know, that that could be the outcome here. I think it would depend a lot on their, what their supply chain looks like, where they are in the clinical trials process, where they are in the FDA approval process.

Have they already come to market? Where do they stand on the reimbursement scale? Small biopharma, the way you say it. suggests that this is not a generic drug, that this is a branded, novel product that's gonna enjoy some protection and perhaps have access to higher reimbursement rates.

And so they might be able to survive this. But certainly it makes the growth plan for those kinds of startup, for those kinds of young companies more challenging. You know, are we going to raise the capital needed to build out this domestic capacity, which seems to be what the policy makers want us to do.

How do we do that? Can we do that with where, we are in our evolution as a company? I think you're gonna see a lot of companies asking that question in the coming months.

Yeah, well, they're going to increase cost. I mean, assuming this goes into effect, which we have all indication that it will in some form or fashion, it's going to increase cost for drugs and certain ingredients. This is gonna make drugs more expensive, which could affect their viability in the US market.

I think drug development could also be delayed or affected, because of increased costs and concerns about return on investment due to the effect of the tariffs in this market and certain drugs and key ingredients, as we said, could end up in short supply due to the increased costs and foreign suppliers pull back from the market.

So one of the things that I observe here is that the pharma industry is, as they're staring down the barrel of this threatened tariff, sectoral tariff program, it's an industry that, like others, has for decades operated without meaningful tariff burdens. Right. So companies that have always had tariff planning within their, you know, corporate organizations and it's always been a significant piece of their operations have a little easier time adjusting to this environment because they have these systems in place, they understand the rules. I think far as pharma companies, they're bracing for this. And for many years, it hasn't been a key part of their cost planning. This has sent many companies scrambling for crash courses on key customs requirements like country of origin, tariff classification, and valuation.

In some cases, you know, companies that have never had to be concerned about duties now have significant incentive to engage in sophisticated transaction planning and optimization to try to lawfully minimize their duty burdens. If the tariffs apply to all countries, then the country of origin will not be as important, but there is a possibility that some countries will at least temporarily enjoy better treatment under this sectoral tariff program. And country of origin is a complex concept when you're using raw materials from different locations and manufacturing them in a different place or packaging them in a different place.

So we'll be looking for that and companies should be looking at that. The exact scope of these tariffs is also not yet known, but it's very likely that tariff classification is going to be a key means of determining applicability of the tariffs. And so this just highlights the importance of companies being able to track and maintain and review their tariff classifications of all of their contemplated imports, both finished products and ingredients.

Customs companies that haven't been very active on this or that haven't prioritized it in the past are now really working hard to build out these internal systems and capabilities to be able to rapidly not only comply but also plan and try to optimize their transactions. I think meanwhile, perhaps the most promising one is that duties are paid on the value of imported goods.

So, well-advised companies right now are really looking closely at their transaction structures and sales into the United States, and they're examining what is the proper customs value of these goods. Again, if you're importing goods and they're duty free, you might not pay as close attention to the value of those goods. Because it doesn't matter what the value of those goods is. You're not paying any duty if the duty rate's free. But now that value will be critical. First sale for export is a doctrine, a long available doctrine under the customs law. It's been used for customs planning for decades, and many companies are revisiting this now under this doctrine.

If an item is being purchased from a party other than the manufacturer, then there is a possibility nonetheless to use the manufacturer's lower price as the declared dutiable value. The, sale from the manufacturer to the middleman… It must be a bonafide sale. It must be a sale for export to the United States. It must be an arm's length price. These requirements must be met and there are documentary requirements that go along with it, but it's one of the several optimization and planning tools that we're helping companies assess and utilize, again, first sale for export, looking at optimizing the correct dutiable value of imported goods.

Well, it's similar. The good news is that it's the same work that I just mentioned that goes into mitigating tariff impacts and optimizing transactions. It's that same type of work that goes into compliance too, right? It's the same. It's country of origin. It's tariff classification. It's entered value. These are core customs compliance areas, and they're gonna continue to be, and they're gonna be subject to audit, and they're gonna be subject to enforcement actions. Importers have an obligation to exercise reasonable care when they're importing merchandise. And that means exercising care to ensure that they're declaring the right origin and they're using the right tariff classification and they're declaring the right value and the proper duties are being paid.

So these same areas that we want to invest in assessing to try to optimize our import transactions are the areas that we need to have a good command of to ensure compliance and to be able to avoid or respond to audits and enforcement action.

So I would suggest reviewing your internal systems and controls over import requirements, looking at your overall written import compliance policies, standing up or refreshing internal organizations for managing imports. Now is the time we're in this high tariff environment.

We need to have careful planning that's gonna help us ensure compliance, and also that we lawfully minimize the duties we're payin

US pharma firms face higher drug costs, delayed launches, and compliance risks from proposed sectoral tariffs, prompting urgent supply chain reviews.

Jason Waite, international trade lead at Alston & Bird, explains that US pharma tariffs may start low and rise, risking drug shortages, higher costs, and pressure on generics amid a reshoring push.



In Part 2 of our multi-part interview series, international trade expert Jason Waite of Alston & Bird outlines the potential implications of the Trump administration’s proposed Section 232 tariffs on imported pharmaceuticals and active pharmaceutical ingredients. The tariffs, previewed at a July 8 cabinet meeting, could start at a relatively low rate and increase over time, potentially reaching up to 200%. While this phased approach is a first for sectoral tariffs, it reflects an acknowledgment of the pharmaceutical industry’s complexity, including the long timelines and significant capital investment required to build domestic manufacturing capacity.

Waite warns that these tariffs, if implemented as suggested, could significantly disrupt the pharmaceutical supply chain, particularly for generic drug manufacturers that operate on thin margins and may be unable to absorb the added costs. He notes that the combination of static reimbursement rates and high capital costs could force some producers to exit the US market, exacerbating existing drug shortages. Waite notes that proactive government affairs strategies, diversification of supply chains, and advocacy for targeted policy alternatives, such as purchasing incentives or regulatory simplification, could better support reshoring efforts more effectively than tariffs alone.

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As I just said, this investigation, this section 2 3 2 investigation which is nearing its conclusion by all accounts, threatens to impose substantial tariffs against pharmaceuticals and API and other ingredients imported into the United States. At a July 8th cabinet meeting, the president said that pharmaceuticals would be tariffed at a quote very high rate, like 200%.

More recently, he said the tariffs would take effect as soon as the end of this month. And and he also indicated that we plan to start with a low tariff to give pharmaceutical companies time to build. Then we're going to increase that tariff or make it much higher. So this type of phase, it remains to be seen exactly how these tariffs will be implemented, what they will come, what the conclusion of this investigation will be.

But we're getting these previews now from the administration. This type of a phase in of tariffs or an increase over time has not been done with sectoral tariffs so far. It does seem to be a recognition that the pharmaceutical market is particularly complex. That so they're considering more creative structures.

The, there is some reason for hope. I think that the tariffs, it may be announced. They might be announced at the end of this month or in early August, that still seems somewhat ambitious in terms of them taking effect. So I think there's some reason to hope that they won't actually take effect until a little bit later than that.

Of course, most people in the industry know that it will take a lot more than a year or even 18 months to be able to build out. US drug manufacturing capacity that doesn't exist today for many drugs. And so the notion that we're gonna have a tariff that starts at a low number and then increases over a year it's not clear that, that period of time, no matter what, the increase is going to be enough.

To reshore manufacturing here. And of course that all assumes, that's just for economically viable production, right? That there's some production that, that, some people would say is it may not be viable at all in the United States. It's not clear yet whether the, how much of this the administration is gonna take into account in its rollout.

This recognition of unique complexities in the market. The apparent idea about phasing it in the very ambitious policy of wanting to reshore pharmaceutical production. I think this does present opportunities for companies to consider government affairs efforts.

Government affairs strategies. Time is short. But the president has shown flexibility in adjusting tariff plans in the past. There could still be opportunities to impact the structure of the pharma tariffs. Based particularly on, for example a particular company's domestic activities, domestic investments, commitments for the future.

Potentially even to seek carve outs for certain ingredients that might help fuel

the policy objective of reshoring of production.

Because what are the alternatives? The alternatives seem to be continue importing at what is threatened to be quite a high tariff, which adds costs or build out domestic capacity, which by accounts I've heard. Is very costly and ha just the capital investment alone is it requires a lot of time, a lot of capital investment, which is sure to

of advice these days in this new high tariff environment is to diversify, sourcing, to spread and mitigate risk. This can be particularly helpful if you, if certain countries are targeted by a particular tariff regime, that you have an alternative that might be less severely affected.

Now, the pharmaceutical tariffs, like other sectoral tariffs are expected to apply to products from all countries equally. Although I think that's one of the. Variables that companies could seek to try to influence. But certainly diversification is something that I still think is just generally advisable.

The other thing is, we, not every, you can't always be swimming upstream, right? There clearly is a, an objective of the United States policy here to onshore or reshore pharmaceutical production. Now, and so companies that can, companies that have, that can build economically viable models for onshoring production, developing greater domestic capabilities, developing more domestic supply chain.

Certainly that's a strategy that needs to be considered as well. I think, if these tariffs take effect, these prices, as we were just saying earlier, these prices are are very likely to eat into profitability. It, some of the prices may be able to be passed on to consumers, but it's likely to eat into profitability of the brand name pharmaceutical companies.

Meanwhile, the generic producers which I understand make up approximately 90% of US drug sales and have very thin profit margins to begin with. They're gonna face a whole set of their own challenges. There's a limited ability to raise prices because of the reimbursement system and the insurance system and how drugs are paid for in our market.

And tariffs could force. There are many that say that tariffs could force generic drug manufacturers to have to choose between operating at a loss or leaving the US market entirely. And if these companies leave the US market, it could result in drug shortages. Many people point out that there are already certain drugs that are in shortage in the US market, and that this could exacerbate that problem or that trend.

We also note interestingly, that companies that are contemplating a disruption in supply in the us in some cases, they have obligations to notify FDA about those kinds of supply disruptions. So this is a one of these complexities of the market that. I don't think there's really an analog in the other sectoral tariff programs.

There's not a similar analog in steel or aluminum or copper, where you've got the these vast differences between branded pharma and generic drugs. You've also got this major overlay of reimbursement. Policies and levels and insurance, right? And so that really makes the market much more complex.

Certain companies and organizations are advocating for the administration to treat. Generic medicines differently. They're arguing that, they're, the margins are so low and the reimbursement rates aren't moving anywhere. So there's just no, there, there's nowhere to go with these tariffs.

They can't simultaneously absorb the tariffs and sell these low margin drugs at the reimbursement rates that are afforded because the reimbursement rates aren't gonna go up. These static rates, the, they've also argued, I think that, these margins make it very difficult to invest in domestic production 'cause of the high cost of that capital investment and the need to run, the return on investment calculations just aren't there for some drugs as we understand it.

And these same organizations point out that, this reimbursement system is it's, the way that this system works. You can pay more tariff, but you're not gonna get reimbursed more. You're not gonna make any more. So this is driving, somebody's gotta eat this and it's gonna be the suppliers.

These and that could lead to, again, that could lead to shortages. That's what many of these organizations and companies are saying. So they're trying to, I think, convince the policy makers in the administration to, to consider this. To look at alternatives. I think the fact that the president has already indicated that this will be a phase in, I think that's a good sign.

It is just a sign that there's a recognition of complexity in the market. The, and the, there are people that can, that these, there are some that are arguing, Hey, you don't, you can do more than just tariffs. Yes. This investigation under 2 3 2 authorizes you to impose tariffs.

But there are other things you could look if you really wanna reshore. Domestic pharmaceutical supply chains and manufacturing. There are other things you should be looking at. You need to use more than just tariffs. You need to use government purchasing programs. You need to use targeted incentives. You need to do some regulatory simplification.

There are other policies that could be implemented that some argue would have a better effect in terms of reshoring production. So anyway, I think the branded pharma companies already have more, some more domestic production and they appear better poised to expand such production.

And they should, that's what they should certainly be looking at doing as well. And they might ha also be able to absorb the tariffs a little bit more because of margins. But. It's it really remains to be seen how this remedy is gonna be fashioned, whe how it's gonna take into account these differences in the market, the reimbursement, ddy dynamics of the market, and frankly the need of patients to have access to medicines.

You can put off, you, you might be able to put if your job is buying steel coil, you can put that off for a month or two, but you can't really put off buying your insulin. If you are if you have diabetes.

US pharma tariffs may start low and rise, risking drug shortages, higher costs, and pressure on generics amid reshoring push.

Jason Waite explains how tariffs on APIs and finished drugs could take effect as early as August 1, with accelerated investigations raising urgency for supply chain planning.

In this first segment of a multi-part interview, Jason Waite, international trade expert at Alston & Bird, outlines how recent United States tariff activity could significantly impact pharmaceutical manufacturers. He explains that the Trump administration has used the International Emergency Economic Powers Act to implement “reciprocal tariffs,” which apply broadly to imported goods, including drug ingredients and finished medicines. Although a federal court recently ruled these tariffs exceed presidential authority, enforcement is on hold pending appeal, with oral arguments scheduled for July 31.

Waite also details the emergence of “sectoral tariffs” under Section 232 of the Trade Expansion Act. These target specific products—including pharmaceuticals, APIs, and medical countermeasures—on national security grounds. The public comment period for pharmaceutical-related tariffs has closed, and decisions could follow as early as August 1. Unlike prior Section 232 actions, current investigations are proceeding on an accelerated timeline, raising concerns about trade disruptions in critical supply chains. Waite notes that high tariff rates have already been assigned to key US trading partners, including the EU, Canada, and Mexico, adding further uncertainty. For pharmaceutical manufacturers, the implications span sourcing, cost structures, and compliance readiness amid a rapidly shifting trade policy environment.

Check out the three other segments of this interview series!


It could have substantial implications on the import and export of all those drug manufacturing items, ingredients, as well as finished medicines. Why don't we step back for a second and just put this in context. Much of the tariff activity that's occurred so far this year has been the implementation of the president's reciprocal tariffs.

These tariffs have been imposed under the authority of the International Emergency Economic Powers Act. The court of international trade held just a couple months ago that these tariffs are illegal because the president exceeded his authority under that act, but that decision is stayed pending the appeal, which is now in the Court of Appeals for the federal circuit.

Oral arguments are scheduled there for July 31st. The reciprocal tariffs started on Liberation Day. That was 10%, and then there were higher country- specific tariffs that were announced, but then paused for 90 days, and then they've recently been pushed out again to August 1st. In recent weeks, the news that you've been seeing is about the president's tariff letters that are being sent out.

I think he's hit about 25 countries so far with tariff letters that, report to unilaterally established the tariff rate applicable to goods from those countries. The latest letters were a little more than a week ago, that Canada got a 35% rate. Mexico got a 30% rate, and the European Union got a 30% rate.

Particularly significant because these are such major trading partners of the United States. Meanwhile, the administration continues to try to reach agreements with trading partners and has announced agreements or frameworks with the UK, Vietnam, and Indonesia, India, the EU, Japan, South Korea, Mexico, Canada.

These are countries that are understood to be continuing to negotiate with that August 1st deadline approaching. And those tariff letters hanging in the balance. But in addition to these reciprocal tariffs that really threatened to address, to affect all goods from all countries, right?

In addition to these tariffs, the president has imposed what's now being referred to as sectoral tariffs against specific products and for this, he uses section 2 3 2 of the Trade Expansion Act of 1962. These tariffs have so far been used against steel, aluminum, automobiles and automotive parts, and they're expected, or there are pending investigations going on that are expected to result in these sectoral tariffs against copper, timber and lumber, semiconductors, trucks, critical minerals, aircraft and jet engines, polysilicon, unmanned aircraft systems, and yes, pharmaceutical products and their ingredients.

The president has said tariffs on copper will take effect August 1 with tariffs on pharmaceuticals and probably semiconductors expected to be next. It was in April that the administration initiated an investigation to determine the effects on national security of imports of pharmaceuticals and pharmaceutical ingredients, including finished drug products, medical countermeasures, APIs, key starting materials, and derivative products of those items. Under Section 2 3 2, the Bureau of Industry and Security within the Department of Commerce conducts an investigation that includes a public comment process, which is already closed with respect to pharmaceuticals. And if the BIS investigation concludes that excessive foreign imports of the target product are a threat to national security, the president may levy tariffs on those imports.

And the administration has been moving these investigations very quickly. By comparison in the first Trump term, the investigations against steel and aluminum, which began in the first Trump term, took close to a year. I think it was 10 months from the time the investigation began until the time tariffs were imposed.

But they're moving faster on copper. They say they're ready to move faster on semiconductors and pharmaceuticals. So they've now gotten this down to what looks to be about four months of investigation before tariffs can be applied as a result of this investigation. And we think these tariffs on the pharmaceutical products could be as soon as August 1.

Tariffs on APIs and finished drugs could take effect as early as August 1, with accelerated investigations raising urgency for supply chain planning.

Simona Guidi, Associate Director, Cell and Gene Therapies at ProPharma discusses human contamination considerations during drug manufacturing

Operators Are the Main Source of Contamination in Pharmaceutical Manufacturing


In this short clip from the June episode of our 

 video series, Simona Guidi, Associate Director, Cell and Gene Therapies at ProPharma, explains the importance of considering humans as a top source of contamination in pharmaceutical manufacturing.

Check out the full episode with Guidi on 

 in which she answers questions about options for controlling adventitious contamination for cell processing requiring extensive manipulation and how to protect the product and operating when moving to a closed processing system for cell therapy production.