US Levies 100 pc Duty On Patented Drugs; Generics Exempted For Now

Chennai: The US has imposed 100 per cent duty on the import of patented pharmaceuticals and associated pharmaceutical ingredients. Generic drugs have been kept out of the duty for the time being. But, if pharma companies increasingly seek evergreening of patents, they will see fewer off-patented drugs in the pipeline.

“I have determined that it is necessary and appropriate to impose a 100 percent ad valorem duty rate on the import of patented pharmaceuticals and associated pharmaceutical ingredients,” US President Donald Trump was quoted in a White House release.

However, generic drugs are not subjected to the duty. “This determination includes purchases of generic pharmaceuticals and ingredients for the Strategic API Reserve. I find that such products should not be subject to section 232 tariffs at this time,” he said. This decision is in favour Indian pharmaceutical companies for the time being.

“For India, the immediate impact is limited. Around 90% of India’s pharmaceutical exports to the U.S. are generics, which remain exempt. However, Indian firms producing branded or specialty drugs, or supplying inputs for patented medicines, could face tariff pressure. The larger concern is future uncertainty if tariffs are extended to generics,” said GTRI. In 2025, India exported $9.7 billion worth of pharmaceuticals to the U.S., accounting for 38% of its global pharma exports of $25.8 billion.

The new order builds on a Section 232 investigation launched on May 1, 2025, which cited national security risks from dependence on foreign drug supplies.

The tariffs are expected to begin between August and September 2026, following a transition period of 120–180 days. Companies that cut prices or shift production to the US may face lower tariffs of 10–20 per cent or get exemptions.

Under the trade agreements signed with the US, allies such as the EU, Japan, Switzerland and the UK enjoy reduced rates. However, the 100 per cent tariff is not country-specific but condition-driven. Even firms within preferred jurisdictions that fail to meet US pricing or localisation conditions can face the full duty.

If the pharma majors producing patented drugs resort to evergreening of patents to mitigate losses from the higher duty, the number of off-patented drugs in the pipeline will become fewer and this can affect the Abbreviated New Drug Applications filed by the Indian companies.

According to the Food and Drug Administration, as of 2025, approximately 53 percent of patented pharmaceutical products distributed domestically are produced outside the country.