Before broad 100% tariffs on imported pharmaceuticals take full effect today, the Trump administration has detailed rules that allow certain specialty drugs, including orphan treatments, nuclear medicines, cell and gene therapies, and antibody-drug conjugates, to enter the U.S. duty-free.
The Trump administration announced the 100% Section 232 tariffs on patented pharmaceutical products and ingredients in April. At the time, the White House said orphan drugs, drugs for animal health and “certain other specialty pharmaceutical products” would be exempt if they meet certain criteria.
In guidance published last week, the Department of Commerce, after consultation with the FDA and the U.S. Department of Agriculture Center for Veterinary Biologics, further defined the drug products that are eligible for a 0% tariff rate.
For orphan therapies, only those with all approved indications designated as “orphan” are exempt.
Nuclear medicines, plasma-derived therapies and fertility drugs, including treatments of ovulatory dysfunction in women desiring pregnancy, are exempt, too.
Cell and gene therapies also dodged the tariff bullet. Under the cell therapy umbrella, the U.S. government listed “cellular immunotherapy, cellular cancer vaccine or other type of autologous or allogeneic cellular product […] including hematopoietic stem cell products and adult and embryonic stem cell products.”
In a drug class newly unveiled in the Commerce Department’s policy update, antibody-drug conjugates are also immune from the Section 232 tariffs. The move hands a big win to Daiichi Sankyo which, in collaboration with AstraZeneca, markets HER2-targeted breast cancer drug Enhertu, the world’s top-selling ADC, and the TROP2-directed Datroway. Daiichi is responsible for manufacturing and supplying the ADCs, and it hasn’t signed a “most favored nation” drug pricing deal with the Trump administration in exchange for reprieve from drug tariffs, as multiple other companies have.
In addition, medical countermeasures and animal health products also qualify for 0% import duties.
Drugs in those categories may receive 0% tariffs only when they come from 19 distinct jurisdictions, unless companies request separate exemptions from the Commerce Department based on urgent U.S. health need.
The 19 jurisdictions include several key drug manufacturing hubs, such as the European Union, India, Japan, South Korea, Switzerland and the U.K.—but not China. The list may change in the future, the Commerce Department said in its notice.
Following China's President Xi Jinping and U.S. President Donald Trump's summit in Washington, D.C., last week, the two sides plan to reduce tariffs on $30 billion worth of goods from each country. The list (PDF) of U.S. imports largely focuses on nonsensitive products such as toys, sports equipment and home appliances and furnishings. Pharmaceuticals are not included.
As to requests based on urgent U.S. public health need, the Commerce Department said applications may include information such as “the type of disease the product treats and an assessment of alternative therapies or lack of alternative therapies for the type of disease the product treats, the number of U.S. patients that use the product, and whether or not the product is available in other jurisdictions.”
The Section 232 pharmaceutical tariffs went into effect in July for 17 large pharmaceutical companies, all of which have signed MFN drug pricing deals with the Trump administration that grant them tariff exemptions until early 2029. The tariffs kicked in for all other drugmakers on Sept. 29.
Last month, Trump unveiled MFN accords with nine other drugmakers, mostly mid-sized foreign companies.
“As Section 232 tariffs extend beyond the largest manufacturers, mid-sized and smaller drugmakers and importers are facing greater exposure,” Chris Young, principal of trade and customs at KPMG, said in a statement. “What a company pays will depend on its on-shoring and pricing commitments, product mix and sourcing, so near-term cost and compliance work has to sit alongside longer-term manufacturing and supply chain decisions. Companies that understand how those variables affect their exposure will be better prepared as further decisions, including the generics review, come into focus.”