Market Watch: the US put a 100 percent tariff on patented medicines

What changed. On 31 July 2026 a 100 percent ad valorem tariff on imported patented pharmaceuticals and their active ingredients became operative for a first group of companies. It applies to everyone else from 29 September 2026.^{1 2}

The instrument is Proclamation 11020, signed 2 April 2026 under Section 232 of the Trade Expansion Act, on a finding that pharmaceutical imports threaten to impair national security. The proclamation records that roughly 53 percent of patented pharmaceutical products distributed in the United States are produced outside it, and only 15 percent of patented active ingredients by volume are domestically produced.¹

The rate depends on what you have signed. There are five positions, not one:

- 100 percent, the base rate on patented products and ingredients in Annex I - 20 percent for companies with an onshoring plan approved by the Commerce Secretary, rising to 100 percent on 2 April 2030 - 15 percent for products of Japan, the European Union, South Korea, and Switzerland and Liechtenstein jointly - 10 percent for the United Kingdom, since reduced to zero with effect from 31 July 2026 following the US-UK pharmaceutical pricing arrangement³ - Zero until 20 January 2029 for companies holding a most-favored-nation pricing agreement with the Department of Health and Human Services

Generics and biosimilars are outside the measure for now. So are US-origin product, orphan drugs where all approved indications are orphan-designated, cell and gene therapies, antibody drug conjugates, plasma-derived therapies, nuclear medicines and fertility treatments.¹

What to do now. Three things, in order.

Classify every US-bound presentation against the new Chapter 99 headings, 9903.04.60 through 9903.04.69. Reporting one of those codes became mandatory on 31 July for every importer, whatever rate applies to you.²

Then decide, before 29 September, which of the three exits you are taking: an onshoring agreement, an MFN pricing agreement, or an exemption category. The application window for onshoring agreements under the published Commerce procedures closed on 12 June 2026, and those applications require investment commitments running to 20 January 2029, semiannual audited milestone reports, and officer certification under penalty of perjury.⁴

Then re-model landed cost with 100 percent as the base case rather than the exception.

Why it matters beyond the United States. Orphan designation and biosimilar status are now tariff-relevant, which makes them portfolio sequencing decisions rather than regulatory ones. And the zero rate is available to companies that sign an MFN pricing agreement, which means a US tariff position is now purchased with an ex-US pricing commitment. Those two decisions used to sit in different functions.