US 100% Pharma Tariff Takes Effect; Select Indian Speciality Drugs Get Zero-Duty Relief

The United States’ 100% tariff on specified patented pharmaceutical products and related ingredients comes into effect for more companies on September 29, while certain speciality medicines from India will receive zero-duty treatment. 

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

India is among 20 jurisdictions named by the US Department of Commerce’s Bureau of Industry and Security for the exemption. The list was included in a September 23 notice published in the Federal Register. 

The relief, however, is limited to specified categories of medicines and does not amount to a blanket exemption for all pharmaceutical products exported from India. 

Which Medicines Qualify for Zero Tariff? 

The zero-duty treatment covers several categories of speciality pharmaceuticals. 

These include drugs for rare diseases where all approved uses carry orphan designation, nuclear medicines, plasma-derived therapies, fertility drugs, cell and gene therapies and antibody-drug conjugates. 

Medical countermeasures used for chemical, biological, radiological and nuclear threats are also included, along with animal health products. Ingredients used in these specified products are covered as well. 

The exemption comes with conditions set out in the US presidential proclamation issued in April. 

The US Commerce Department can apply the zero rate when qualifying products come from a jurisdiction that has an existing or forthcoming trade and security framework agreement with the United States. The exemption can also apply when a product is considered necessary to meet an urgent health requirement in the US. 

Along with India, the jurisdictions listed for the relief include Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland and Liechtenstein, Taiwan, Thailand, the United Kingdom and Vietnam. 

Which Pharmaceutical Products Still Face the 100% Tariff? 

Specified patented medicines and pharmaceutical ingredients covered by the US tariff regime continue to face the 100% levy unless they qualify for an exemption or another form of tariff treatment. 

This means patented medicines from India that fall outside the specified zero-duty categories can remain subject to the 100% tariff. 

The tariff was introduced under Section 232 of the US Trade Expansion Act of 1962. 

Companies that have approved arrangements to shift manufacturing to the United States may receive different tariff treatment under the April proclamation. 

Generic Medicines Remain Outside the Tariff 

Generic medicines are treated separately under the US framework. 

According to the Commerce Department notice cited in the report, generic pharmaceutical products and their associated ingredients are not covered by the Section 232 pharmaceutical tariffs. 

The definition of pharmaceutical articles under the framework covers finished medicines, active pharmaceutical ingredients and key starting materials. Inactive ingredients and excipients are excluded. 

As a result, the 100% levy is primarily applicable to covered patented medicines and associated ingredients rather than generic drugs. 

Tariff Rollout Expands From September 29 

US President Donald Trump announced the broader pharmaceutical tariff in April as part of an effort to encourage more drug manufacturing within the United States. 

The tariff came into force on July 31 for companies covered under one annex of the presidential proclamation. From September 29, its application extends to additional companies falling within the Section 232 pharmaceutical tariff framework. 

For India, the latest US notification provides zero-duty access for the specified speciality medicine categories, while other covered patented pharmaceutical products remain subject to the tariff rules.