While the White House focused its initial Section 232 pharmaceutical tariffs on branded drugs, generics makers—who supply the vast majority of U.S. prescriptions—won’t stay in the clear for long.
In an act of policy-by-way-of-social-media-post, President Donald Trump declared on Truth Social last night that, although all generic drugs imported into the U.S. will continue to be tariff-free for the time being, the rate will be raised to 100% for a “one year period of time” starting in August of 2028, after which it will be raised to “200% thereafter.”
Pointing to the need to “RESHORE Generic Pharmaceutical Production into America,” Trump said the goal of the newly proposed duties is to apply a penalty to companies “that decide not to build Plant and Equipment within the stated period of time given to them" in the U.S.
“The Policy on Patented, Branded, or Innovative Drugs, which has been so successful, will remain as is,” the President added.
As with previous announcements around tariffs, Trump’s proposal was slim on precise details.
In a note to clients late Tuesday, analysts at Jefferies flagged uncertainties around the policy’s distinctions on products that are manufactured in part in the U.S., and whether it would only apply to finished goods, or active pharmaceutical ingredients, too.
But according to a person familiar with the matter, the White House's plan aims to include both finished drugs and API under a Section 232 framework.
And while Jefferies speculated that the move would likely prompt generic drugmakers to “sign deals and commit capital” to the U.S. as many branded drugmakers have done since last year, the source suggested that rather than drafting formal reshoring plans, generic drugmakers will simply have a two year window to reshore production before tariffs kick in, likely with some degree of support from the U.S.
In an emailed statement, White House spokesperson Kush Desai told Fierce that “President Trump’s announcement provides a two-year runway for generic drugmakers to reshore production back into the United States, and the Administration’s full equipment expensing, aggressive deregulation, and other policies are aimed at making this transition as seamless as possible."
Desai added that Trump's MFN deals and Section 232 program for branded drugs are "proof that this Administration has a track record of success to get critical manufacturing back into the United States.”
In the near-term, however, the Jefferies team said it expects the news to “drive uncertainty” among specialty pharma generics, benefiting those companies with U.S. manufacturing for now.
Operating on the assumption that drugs would only need to be finished in the U.S., rather than manufactured end-to-end on American soil, the analysts suggested that Amphastar Pharmaceuticals and ANI Pharmaceuticals are “most insulated” right now given that most of their generics are finished in the U.S.
Conversely, Viatris generates around 25% of its total revenue from the U.S., but half of its generics are imported. Teva depends on around 15% of its revenue coming from U.S. sales of generics, most of which are made in Europe.
Meanwhile, Canada’s Apotex appears “most exposed” in the analyst’s estimation because it currently has no U.S. manufacturing, despite the country making up around 40% to 50% of its total revenue on generics sales.
Elsewhere, Swiss generics juggernaut and Novartis spinoff Sandoz has told The Wall Street Journal that it plans to continue talks with U.S. policymakers in light of the new tariff threat, although it caveated in a statement that it’s too early, and the details too sparse, to properly assess how the import tax might affect Sandoz’s production and investment plans.
Fierce has reached out to Sandoz for a statement on the development, and whether it has given any thought to plans to shutter its sole U.S. production facilities in Long Island—a move that has been slated to occur around the end of this year.
After substantial saber-rattling on pharma tariffs throughout 2025, Trump in April of this year formally introduced a 100% tariff rate on patented pharmaceutical products and ingredients under Section 232 of the Trade Expansion Act of 1962, slated to kick in after certain time frames that gave a bit more leeway to smaller-scale drugmakers.
At the time, generics and biosimilars makers, plus their products and “associated ingredients,” were exempted from the duties, alongside orphan drugs and other specialty products.
Additionally, companies operating in countries with their own U.S. trade deals, and those who’ve made major manufacturing pledges in the States, can dodge the duties for a set period.
With the cudgel of tariffs looming off to the side, the second Trump administration has managed to extract manufacturing and R&D investment pledges, plus new drug pricing commitments under his “most favored nation” model, from the majority of the largest pharma companies.
Regeneron is among the most recent high-profile drugmakers to play ball with the President, announcing its deal in April after similar accords were struck by the likes of Novo Nordisk, Eli Lilly, Gilead, Roche, Novartis and nearly a dozen other Big Pharma companies.
As part of the New York pharma’s pledge, which also included concessions around drug pricing, Regeneron has committed more than $9 billion to grow its U.S. production and research operations in the coming years. That template is repeated across the other MFN deals.
While generics have appeared insulated from tariffs until now, CEO of the United States Pharmacopeia (USP), Ronald Piervincenzi, Ph.D., warned in an interview last year that the Trump administration’s trade policies could uniquely harm access to generic drugs if applied to them, given just how “little resilience” the industry enjoys versus its branded counterpart.
Much of the supply chain for generic medicines is based overseas in places like China, India and Europe, even as the copycat medications account for some 90% of the United States’ prescription volume, by the FDA’s own reckoning.
Editor's note: This story has been updated with additional comments and a statement from a White House spokesperson.