Last week, U.S. President Donald Trump disclosed plans for a “major tariff” on foreign pharmaceuticals.
BofA Securities analyst said if the Trump administration plans to impose tariffs on the pharmaceutical industry, it would likely do so through a “Section 232 investigation” under the Trade Expansion Act of 1962 to determine whether importing certain goods threatens national security.
The U.S. Department of Commerce has launched an investigation into the potential national security risks posed by the country’s reliance on imported pharmaceuticals and key drug ingredients.
The probe, initiated under Section 232 of the Trade Expansion Act, will examine the effects of these imports on the nation’s ability to produce essential medicines and respond to public health emergencies.
Announced on April 1, 2025, the investigation will evaluate a wide scope of pharmaceutical imports.
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This includes finished generic and non-generic drug products, medical countermeasures, active pharmaceutical ingredients (APIs), key starting materials (KSMs) and related derivative products.
The goal is to assess how these imports affect the integrity and resilience of the domestic pharmaceutical supply chain.
The Bureau of Industry and Security (BIS) is seeking input from stakeholders as part of the investigation.
As per the Federal Register filing, key issues under review include current and future U.S. demand for pharmaceutical products and whether domestic manufacturing capacity can meet that demand.
There will be an examination of the role of foreign supply chains, particularly the extent to which U.S. pharmaceutical imports are concentrated among a small number of suppliers and the associated risks of such dependence.
Additional focus areas include the impact of foreign subsidies and potentially predatory trade practices on the competitiveness of U.S. pharmaceutical companies.
The department is also looking into concerns over artificially suppressed prices due to foreign state-sponsored overproduction and the risk of export restrictions by foreign governments that could be used to leverage geopolitical power.
The feasibility of expanding domestic manufacturing capacity to reduce reliance on imports and the effectiveness of current trade policies will also be evaluated.
The investigation could result in policy recommendations, including potential tariffs or quotas, to bolster the nation’s pharmaceutical security.
"AAM and the generics and biosimilars industry look forward to working with the Commerce Department and the White House to engage constructively on ways to incent more domestic investment in the medicines supply chain," said John Murphy III, president and CEO of the Association for Accessible Medicines, a trade association representing the manufacturers and distributors of generic prescription drugs.
“Tariffs, however, will only amplify the problems that already exist in the U.S. market for affordable medicines,” Murphy added.
"Without substantive regulatory and reimbursement changes to the U.S. market, tariffs will exacerbate shortages that hinder patient access today," he continued.
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Photo: Aria Armoko via Shutterstock
