Section 232 tariffs on patented pharmaceutical products and associated pharmaceutical ingredients take effect today, Sept. 29, for companies not covered by the earlier July 31 implementation date. The tariffs follow a Commerce Department investigation that found U.S. dependence on imported pharmaceuticals and pharmaceutical ingredients threatened to impair national security.
Here are four things to know:
- Large manufacturers named in Annex III of Presidential Proclamation 11020 fell under the tariff framework starting July 31, ahead of all other companies, which became subject to it Sept. 29.
- Companies with qualifying most-favored-nation pricing and onshoring agreements with the administration receive a zero tariff rate through Jan. 20, 2029. As of an Aug. 31 White House announcement, all 17 Annex III companies, including AbbVie, Amgen, AstraZeneca, Bristol Myers Squibb, Eli Lilly, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer and Sanofi, have signed MFN deals, meaning none currently pay the tariff.
- The baseline tariff on covered patented pharmaceuticals and associated ingredients is 100%. Companies with approved U.S. onshoring plans can receive a 20% rate, which is set to increase to 100% April 2, 2030. Different rates apply to products from certain U.S. trading partners, and generic drugs and biosimilars are not subject to the Section 232 pharmaceutical tariffs at this time.
- Health system pharmacy leaders have been watching the tariff timeline closely amid broader efforts to diversify drug sourcing. Vizient projects pharmaceutical prices will rise 3.54% in 2027, a forecast that does not include potential tariff effects because of uncertainty surrounding their implementation and impact.
