What new tariffs mean for pharmaceuticals, patented drugs

President Donald Trump’s announcement that his administration will impose a 100 percent tariff on patented pharmaceutical products sparked confusion Friday, as government officials, drug companies and trade groups sought clarity on how the levy would be applied. But the plan delivered one unambiguous mandate: It sent drugmakers scurrying to show that they are building manufacturing capacity in the United States.

In a Truth Social post late Thursday, Trump said brand-name prescription drugs would be subject to tariffs unless their manufacturers are actively building plants in the United States. There will be “no Tariff on these Pharmaceutical Products if construction has started,” the post said.

The reaction from drugmakers has been swift. “Right now, cranes are rising at Novo Nordisk’s U.S. manufacturing site in North Carolina,” CEO Mike Doustdar said in a statement Friday. The Danish company produces the Ozempic and Wegovy weight-loss and diabetes drugs.

California-based Amgen announced a $650 million expansion Friday at its manufacturing facility in Puerto Rico.

But it’s unclear whether such pledges, part of a flood of commitments by pharmaceutical companies this year to invest in domestic manufacturing, will help them avert the levies. An administration official told The Washington Post that tariff exemptions would apply only to individual drugs that companies choose to make in the United States rather than abroad. “These waivers would apply to each specific product as opposed to a companywide waiver,” said the official, speaking on the condition of anonymity because the process is still being crafted.

The move adds further uncertainty to U.S. trade policy, at a time when U.S. courts are weighing the legality of some of Trump’s earlier tariffs and many Americans are facing the prospect of higher health insurance premiums. Here’s what to know:

1. What does Trump’s tariff announcement mean?

Trump’s Truth Social post said, “Starting Oct. 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America. ‘IS BUILDING’ will be defined as, ‘breaking ground’ and/or ‘under construction.’”

Though pharmaceuticals were exempt from Trump’s broad tariff announcement in April, extra levies on the products were still expected to come into effect.

Nevertheless, there was confusion Friday over how exactly the tariffs would be applied, as experts noted Trump’s post did not make clear whether the tariffs applied to countries that already had established trade deals with the United States or whether exemptions also applied to companies that already had manufacturing factories in the United States.

European Union trade officials, for example, stressed that they expected tariffs on E.U. pharmaceutical companies to be capped at 15 percent, given the “clear all-inclusive 15% tariff ceiling for E.U. exports” included in the recent trade deal between the United States and the E.U. Irish Trade Minister Simon Harris said his government would be “studying the impact of the announcement” but stressed that the U.S.-E.U. trade agreement “made absolutely clear” that any new U.S. tariffs on pharmaceuticals would be “capped at 15%.”

The administration official said the United States would honor the 15 percent cap as part of its trade deal and confirmed that the pharmaceutical tariffs Trump announced do not apply to generic drugs.

The European Federation of Pharmaceutical Industries and Associations called for “urgent discussions … on how to avoid any tariffs on medicines that harm patients,” noting that “the E.U. and U.S. already have a trade agreement in place.”

European countries that are not part of the E.U. said they would be reviewing the announcement, while acknowledging it had caused some concern or confusion.

The U.K. government said in a statement the announcement was “concerning for industry” but that the government would continue “actively engaging with the U.S.” The Swiss government said it had “taken note of the announcement” but that “no details of the announced measures are currently known,” and that it would continue “analyzing the effects of these measures.”

2. What impact would these tariffs have?

Drug manufacturers have said that exposure to major companies should be limited, as many already are engaged in manufacturing drugs or constructing facilities in the United States.

Several European drugmakers have recently announced plans to boost manufacturing in the United States, potentially insulating them from the new tariffs.

Swiss pharmaceutical company Novartis said “the announced 100% tariff should not have an impact” on the company. The Swiss drug developer Roche, which makes the popular flu drug Tamiflu and the acne treatment Accutane, recently announced its investment in a manufacturing site in the United States. And in July, British-Swedish company AstraZeneca committed to investing $50 billion in the construction of a facility in Virginia that would make ingredients for its weight-loss and metabolic drugs.

However, trade groups representing businesses and pharmaceutical companies were critical of the announcement.

“The immediacy of punitive, 100% tariffs on innovative medicines for any company without ‘shovels in the ground’ would devastate our nation’s small and mid-sized biotechnology companies,” John Crowley, CEO of the Biotechnology Innovation Organization, said in a statement.

“Tariffs increase costs, disrupt supply chains and prevent patients from getting life saving treatments,” Nathalie Moll, director general of the European Federation of Pharmaceutical Industries and Associations, said in a statement.

Pascal Chan, vice president of strategic policy and supply chains for the Canadian Chamber of Commerce, said that the tariff would “have profound and potentially dire consequences on Americans’ health,” as “disrupting the supply chain with such a steep tariff would lead to immediate price hikes, strained insurance systems, hospital shortages, and the real risk of patients rationing or forgoing essential medicines.”

He added that some companies would find it “impossible” to relocate manufacturing to the United States quickly, given the bureaucracy and costs involved.

3. Why are tariffs on pharmaceuticals controversial?

Until now, pharmaceuticals have been exempt from the Trump administration’s tariffs, but the Commerce Department is investigating the effects of drug imports on national security.

Trade associations and lobbyists for pharmaceuticals have argued that drugs should be considered separately from other goods given their role in the health system.

The American Hospital Association, and some insurers, have previously warned that tariffs could raise the price of drugs or health insurance premiums.

In 1994, a World Trade Organization agreement that the United States signed scrapped tariffs and other duties on a large number of pharmaceutical products and the substances used to produce them, keeping them at duty-free levels among signatories.

Brad Setser, a senior fellow at the Council on Foreign Relations, said that the Trump administration’s recent tariffs aren’t consistent with the WTO agreement, adding that the United States can deviate as long as there’s a legal justification such as for national security.

4. Where do U.S. medications come from?

In 2024, the United States imported nearly $233 billion in pharmaceutical and medicinal products, the Associated Press reported, citing the Census Bureau.

Of that, $45.5 billion came from the E.U., with companies shipping in medicines ranging from vaccines to weight-loss semaglutide injections.

The global supply chain for medicines is highly complex, with medicines often containing elements from more than one country. Where they are made can also depend on the form the medicine takes, according to US Pharmacopeia, a nonprofit organization that tracks the global drug supply chain.

Complicating things further is the fact that it’s common for companies to source “active pharmaceutical ingredients”—known as API—overseas and assemble medications in the United States. In the past, U.S. reliance on foreign sources for key pharmaceutical ingredients has raised national security concerns as well as fears for patients in the event of disruption.

5. How could tariffs impact drug prices?

Imposing a tariff on an imported medication is equivalent to taxing it, increasing the cost to manufacturers. But how a tariff translates into what consumers pay for brand-name prescription drugs is an exceedingly complicated formula, which depends in large part on the vagaries of drugmakers’ tax strategy.

“For patent-protected medicines, the consumer impact is uncertain,” said Setser of the Council on Foreign Relations. “It gets tied to all the complexities of tax.”

Pharmaceutical companies could try to pass the costs on to consumers, but may meet resistance from insurers unwilling to accept higher prices. Some multinational drugmakers could conclude that the cost of U.S. tariffs is worth paying higher taxes to lessen their duties on imported drugs, Setser said. That makes the prospect of getting an exemption for U.S. manufacturing “incredibly valuable because you don’t have to change your tax strategy.”

Dave Ricks, CEO of Indianapolis-based Eli Lilly and Co., said in an interview last week that the administration’s tariff policy “seems to change week to week” and the company couldn’t rely on it to make major investments, including a $5 billion manufacturing plant it plans to build outside of Richmond, Virginia, and a $6.5 billion plant in Houston. If pharmaceuticals were subject to a tariff, he said, “we would just rebalance where we make things.”

While the Trump administration has said pharmaceutical tariffs are designed to get drugmakers to make more medications domestically, it also is trying to bring down drug prices. In letters to pharmaceutical executives, Trump has called for them to lower the cost of medications in the United States by Sept. 29. The 100 percent tariff he announced is set to take effect Oct. 1.