Smaller pharmaceutical companies and those outside countries with trade deals with the US will bear the brunt of President Donald Trump’s 100% tariff on imported patented pharmaceuticals and their active ingredients announced last week.

The tariff will be imposed on large companies 120 days from the announcement, and in 180 days for smaller ones.

Pharmaceutical companies from the European Union, Japan, the Republic of Korea, Switzerland and Liechtenstein will pay a 10% tariff and UK pharma companies are exempt from tariffs, thanks to earlier deals with the US.

Meanwhile, 16 big pharma companies, including Pfizer, Novo Nordisk, Eli Lilly and Johnson & Johnson, will also escape the 100% tariff as they reached “onshoring agreements” with the US Department of Commerce last year. Some of these companies also entered into “Most Favored Nation (MFN) pricing agreements with the US Department of Health and Human Services (HHS)”.

Companies that have both onshoring and MFN agreements will pay no tariffs, while those with onshoring agreements only face a 20% tariff.

However, commentators warn that many smaller pharma companies don’t have the flexibility or capital to make such deals.

Swiss pharma warning

The Swiss pharma association, Interpharm, warned last week that the tariffs “endanger global production and supply chains for pharmaceuticals, hinder research and development and ultimately harm patients worldwide.”

“Even if those companies that have concluded a deal with the USA are to be exempted, this decision may have an impact on security of supply,” said Interpharm, which represents all the major research-based pharmaceutical companies in Switzerland.

It also “demanded” that Switzerland secures an agreement with the US similar to that of the UK, and implements “extensive reforms” to ensure that the country “remains attractive for investment in research and development of innovative medicines in the future.”

Interpharm’s members include Johnson & Johnson, Novartis, Roche, AbbVie,, AstraZeneca, Bayer, Biogen, Boehringer Ingelheim, Bristol-Myers Squibb, Gilead, GlaxoSmithKline, Lilly, Merck, Pfizer and Sanofi.

Making his announcement, Trump said that, in 2025, approximately 53% of patented pharmaceutical products and 15% of APIs distributed in the US were imported.  

Last year, the US imported $274 billion in pharma and medical products, but 80% of these were from the EU, Japan, South Korea, Switzerland and the UK.

Meanwhile, companies supplying an estimated two-thirds of branded medicines had already made deals with the US.

This means that only around $12 billion of imported medicines will be taxed at 100%.

Generic and animal medicines and biosimilars are exempt from tariffs, but this policy will be reviewed in a year’s time.

‘Jeopardise investment’

Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), warned that the tariffs “on cutting-edge medicines will increase costs and could jeopardise billions in US investments announced in the last year.”

“Every dollar spent on tariffs is a dollar that can’t be invested in communities across the country,” said Ubl. 

“The innovative biopharmaceutical sector has a robust US manufacturing footprint. In fact, two-thirds of the medicines that are consumed in the US. are made in America. And when innovative medicines or their inputs are sourced from other countries, these products overwhelmingly come from reliable US allies, like Europe and Japan.”