US President Donald Trump has signed an executive order imposing a steep 100 percent tariff on imported branded pharmaceuticals, in a major push to cut drug prices and bring manufacturing back to the United States.
The move targets high-cost patented medicines produced overseas but sold at significantly higher prices in the US compared to other developed markets.
Under the new policy, branded drug imports will face a 100 percent tariff unless companies either:
Shift manufacturing to the US, or
Enter government-backed pricing agreements
Firms that relocate production to the US will qualify for a reduced tariff rate of 20 percent, offering a transition window for operational changes.
The administration has given drugmakers limited time to respond:
Large companies: 120 days to submit compliance plans
Smaller firms: 180 days
Companies can fully avoid tariffs by combining US manufacturing with “most-favoured-nation” pricing agreements with the US Department of Health and Human Services. These agreements aim to align US drug prices with those in other advanced economies.
According to reports, agreements have already been reached with 17 pharmaceutical companies, with most finalised and a few still under negotiation. Participating firms will receive tariff exemptions for up to three years.
Industry sources indicate that small and mid-sized drugmakers are seeking individual arrangements to avoid both tariffs and stricter pricing norms.
Generic medicines have been kept out of the tariff net. This is significant, as generics account for over 90 percent of prescriptions in the US.
For India, the immediate impact may be limited as the tariff applies only to branded, patented drugs, while Indian pharma exports to the US are dominated by generics. However, the policy could still have indirect implications. Indian contract manufacturers supplying to global innovators may face pressure if production shifts to the US, while any tightening of pricing norms could alter partnership models.
Over the medium term, the move may also push Indian firms to explore US-based manufacturing or joint ventures to stay competitive in the world’s largest pharmaceutical market.
