President Donald Trump has signed an executive order that could impose tariffs of up to 100 percent on imported patented drugs if pharmaceutical companies fail to strike pricing and manufacturing deals with the US government. The move targets drugmakers that do not agree to "most favoured nation" pricing terms and do not invest in US-based production facilities. Companies already engaged in such deals will face zero tariffs, while those building US facilities without pricing agreements will face a 20 percent tariff, rising to 100 percent within four years. A senior administration official, speaking anonymously ahead of the order's release, confirmed that 17 pricing agreements have been reached with major drugmakers, 13 of which have been finalized. Larger firms have 120 days to negotiate, while smaller companies have 180 days before penalties could apply.
Trump justified the tariffs under national security grounds, citing risks posed by reliance on imported pharmaceuticals and active pharmaceutical ingredients. The order coincided with the first anniversary of his "Liberation Day" announcement, which introduced broad import taxes later overturned by the Supreme Court. Stephen J Ubl, CEO of PhRMA, warned that taxing advanced medicines could raise costs and threaten US biopharmaceutical investment, noting that most foreign-sourced medicines come from trusted allies. The European Union, Japan, South Korea and Switzerland will face a 15 percent tariff on patented drugs, consistent with existing trade terms, while the UK will face a 10 percent rate, set to fall to zero under future agreements. The UK government previously stated it had secured zero tariffs on all British medicines exported to the US for at least three years. The administration has previously used tariff threats to secure deals with companies including Pfizer, Eli Lilly and Bristol Myers Squibb, aiming to lower drug prices.
When Trump frames drug tariffs as a national security issue, it signals a strategic shift from health policy to economic coercion. The real target isn't foreign suppliers—it's domestic drug pricing power, leveraged through the threat of punitive trade measures. By offering escape hatches to companies that build factories and cut prices, the administration is effectively auctioning tariff relief for political wins. This isn't about protecting supply chains; it's about using trade authority to force concessions the healthcare system couldn't achieve through regulation.
