How 100% Pharmaceutical Tariffs Will Impact Domestic Manufacturing and Supply Chains

A new trade policy from President Donald Trump introduces a significant tariff on imported pharmaceuticals, directly impacting manufacturing strategies and supply chains for companies serving the United States market (1). This development adds another layer of complexity to an industry already navigating supply chain pressures, regulatory changes, and capital market demands (2-7).

In a statement released on Thursday via Truth Social, the president detailed a plan to impose a 100% tariff on all imported branded or patented pharmaceutical products, effective October 1, 2025 (1). This move follows months of discussion around potential sectorial tariffs, with rates previously suggested to be as high as 250% to incentivize domestic production. The president stated his reasoning clearly, noting, "because we want pharmaceuticals made in our country".

The policy includes a critical provision for pharmaceutical developers: the tariff can be avoided if a company has initiated the construction of a manufacturing facility within the US (1). "There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started," the president wrote. This ultimatum to onshore production presents a pivotal challenge for industry leaders, from those managing outsourcing and supply chains to executives making long-term capital investment decisions.

It remains unclear if this new 100% rate will be applied in addition to a previously announced 15% tariff on pharmaceuticals imported from the European Union (1). This lack of clarity introduces further uncertainty for global manufacturing and logistics planning.

How are industry and investment trends responding?

For professionals tracking major industry moves and investment strategies, the tariff announcement crystallizes a trend that has been building for months (1-23). Many major pharmaceutical companies, anticipating such policy shifts, have already committed to substantial investments in US-based manufacturing infrastructure.

AstraZeneca announced a $50-billion investment in late July, expressing confidence in its ability to produce nearly all its drugs for the US market domestically (24). Other significant commitments have come from Johnson & Johnson ($55 billion), Roche ($50 billion), Bristol Myers Squibb ($40 billion), Eli Lilly ($27 billion), Novartis ($23 billion), and Sanofi (at least $20 billion) (1). Eli Lilly recently broke ground on two new plants as part of its investment.

While these multi-billion-dollar projects signal a clear direction, questions remain about whether these new facilities will have the capacity and technical capability to manufacture every patented product currently marketed in the US (1). For those in drug development and manufacturing, this raises critical considerations about technology transfer, scalability, and the complexities of establishing new production lines for diverse product portfolios.

What are the regulatory and supply chain implications for bio/pharma?

This policy shift intersects directly with ongoing industry-wide conversations about securing supply chains and navigating the regulatory landscape (3). The vulnerability of established drug supply chains has been a recurring theme, and this tariff serves as a powerful catalyst for onshoring initiatives (3,25,26).

To support this domestic manufacturing push, FDA recently launched its PreCheck initiative (27). This program is designed to streamline the process for companies seeking to build new manufacturing sites in the US. For regulatory affairs professionals, understanding and leveraging such initiatives will be crucial for managing timelines and ensuring compliance, echoing the industry's interest in programs like the European Commission's efforts to streamline drug lifecycle management.

The ultimatum effectively ties market access to domestic investment, forcing companies to re-evaluate their global manufacturing footprint. This will have far-reaching effects on everything from the development of small molecules and active pharmaceutical ingredients to the sourcing of excipients, areas already facing significant supply chain pressures (3).

What about pharmaceuticals that aren't fully generic or entirely new?

"We should discuss drugs approved under 505(b)(2)—a category that is neither fully generic nor entirely new," says PharmTech editorial advisory board member Aloka Srinivasan, PhD, principal and managing partner, Raaha LLC, and an expert on generics. "Generics, which are pharmaceutical equivalents of innovator products, are approved under 505(j). New chemical entities, which require the full spectrum of nonclinical and clinical studies, are approved under 505(b)(1)."

Srinivasan adds that the 505(b)(2) pathway, however, applies to pharmaceutical alternatives to existing products. "These drugs are approved with a limited set of data and may or may not be under patent protection," she explains. "For example, if the innovator product is a 10 mg tablet, a company might develop a 10 mg capsule or an oral solution. By demonstrating equivalence to the original tablet through minimal studies like in case of generics, the company can establish safety and efficacy and obtain FDA approval under the 505(b)(2) pathway. Most 505(b)(2) have some patent protection, though they are not as extensive as new chemical entities."

Although these products are technically considered "new" by the FDA, according to Srinivasan, they are very close to generics and can offer advantages, such as improved patient compliance. "Additionally, they may help reduce costs of drugs and give patients better choices," she continues. "It will be interesting to observe how such products are impacted in the market and whether 100% tariff on such products affects the broader drug landscape."

What is boils down to, says Srinivasan, is that nobody is able to clearly understand the 100% tariff. "President Donald Trump announced Thursday that brand-name or patented pharmaceutical products will be subject to a 100% tariff starting October 1 – unless the drugmaker is building a manufacturing plant in the US," she notes. "The definition is not clear, there are several brand named products with no patents; will they be exempt? Also, several products may have patents but not a 'brand name.' We need more clarity around these."

References

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