Donald Trump has threatened to impose 100% tariffs on pharmaceutical companies that fail to strike deals to reduce drug prices in the United States. The new tariff will apply to branded drugs and their active ingredients, while generic drugs—which account for over 90% of medicines sold in the US—will be exempt for at least one year. Orphan, veterinary, and other specialty drugs are also exempt if they come from trade deal countries or meet urgent public health needs.
Drugmakers that enter pricing agreements with the White House and onshore production will be exempt from the tariffs. Companies planning to increase domestic manufacturing will face a 20% tariff, rising to 100% over four years. The US has already agreed to exemptions for 17 drugmakers, with four still under negotiation. Major firms like Pfizer and Eli Lilly have signed deals exempting them from tariffs for three years.
Large companies have 120 days before the tariff takes effect to negotiate deals, while smaller firms have 180 days. The Midsized Biotech Alliance of America (MBAA) criticised the policy, warning it creates an “unfair two-tiered system of exemptions” benefiting only big companies. MBAA president Alanna Temme said mid-sized drugmakers “lack diversified portfolios to absorb these sudden cost increases”.
Trump has been using his most-favoured-nation drug pricing policy to pressure companies to lower prices to levels paid in other high-income countries. US patients pay nearly triple what patients in other developed nations pay for prescription medicines. The announcement comes amid consumer pressure to lower prices, heightened by tariff-related increases and high gas prices linked to the US-Israel conflict with Iran.
In January, Trump outlined economic policies to address the rising cost of living, which he blames on the Biden administration. These include banning large institutional investors from buying single-family homes and capping credit card interest rates at 10%. Trump previously stated that action on drug prices alone should help win the midterms.
