Fast Facts
- Effective date: Oct. 1, 2025
- Scope: Applies to all branded and patented drugs imported into the US
- Exemption: No tariff if the company is actively building a US manufacturing plant (defined as “breaking ground” or “under construction”)
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Trump Announces 100% Tariff on Branded Drugs Unless Pharma Builds US Plants
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Key Takeaways
- A 100% tariff on branded drugs will be imposed unless companies build US manufacturing plants, effective October 2025.
- Major pharmaceutical companies are investing heavily in US manufacturing to avoid tariffs and comply with new policies.
Beginning Oct. 1, the US will impose a 100% tariff on branded and patented pharmaceutical imports unless manufacturers are actively building domestic production facilities, a move aimed at reshoring drug manufacturing.
Image Credit: Adobe Stock Images/Janews094.com
Last night, President Trump revealed that the United States will be enacting a 100% tariff on any branded or patented drugs that are entering the country.1
The duty will take effect Oct. 1, with the caveat being that the tax will not apply to any businesses that are constructing domestic production plants.
Trump defines “is building” requirement
“Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” the president wrote in a Truth Social post.2 ‘IS BUILDING’ will be defined as, ‘breaking ground’ and/or ‘under construction.’ There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started. Thank you for your attention to this matter!”
What’s also important to note that branded or patented pharmaceuticals are meds marketed under a trade name and safeguarded by patents or other intellectual property rights, preventing generic competitors from entering the market until those protections expire.
A push for domestic pharma manufacturing
It’s no secret that Trump has been a huge supporter of these tariffs to encourage reshoring of manufacturing back to the US. In August, Trump issued letters to 17 of the largest pharmaceutical companies—including Eli Lilly, Genentech and GSK to name a few—expressing urgency for making changes along the drug pricing front.3
The letters—which all have the same wording—stem from an executive order (EO) he enacted in May that essentially proclaimed that pharma companies need to treat the United States as a most-favored nation (MFN) as it pertains to drug pricing. The EO notes that US drug prices need to be less than or equal to the drug’s lowest price in other nations, as a way of establishing fairness.
This includes extending MFN pricing to Medicaid; guaranteeing MFN pricing for newly-launched drugs; returning increased revenues abroad to American patients and taxpayers; and providing for direct purchasing at MFN pricing. The companies who received a letter have until Sept. 29 to comply.
Major pharma companies respond with US investments
All of the companies mentioned above have since taken action in various ways:
- Eli Lilly and Company will be constructing a new $6.5 billion manufacturing facility at Generation Park in Houston, TX.4 The development represents the second of four sites in the United States that Lilly plans to reveal this year, with the first being a $5 billion production plant in Goochland County, VA that will be considered the company's first fully integrated facility dedicated to APIs pharmaceutical ingredient and drug product.5
- Genentech broke ground on its most recent US manufacturing plant—a 700,000 square-foot facility in Holly Springs, NC.6 This $700 million-plus investment represents the company’s first production facility on the East Coast and is part of a $50 billion commitment to investing in US manufacturing, infrastructure, and R&D.
- GSK revealed that it will be financially committing a total of $30 billion across the United States dedicated to research and development—along with the entire pharma supply chain—over the next five years.7 A portion of that investment is also dedicated to clinical trial ops.The plan is headlined by a $1.2 billion investment in advanced production plants, coupled with AI and other advanced digital tech, all of which are part of a greater plan to provide brand-new biopharma facilities and labs. GSK’s mindset revolves around the development and production of products in the US, for the US.
And just today, Amgen announced a $650 million expansion of its US manufacturing network, which is expected to help boost drug manufacturing its biologics plant in Juncos, Puerto Rico.8
The growth project is headlined by new tech for operations and the creation of about 750 jobs in both construction and highly skilled manufacturing roles.
Legal battles over tariff authority
However, tariffs continue to be in question. Earlier this month, the Trump administration requested that the US Supreme Court hear out an appeal to overturn a previous ruling by a lower court declaring that a majority of the president’s tariffs are null and void.9
In a 7-4 decision, the US Court of Appeals for the Federal Circuit ruled that President Trump exceeded his power in enacting the import taxes on many countries across the globe. The tariffs were enacted to encourage local manufacturing, being that these wouldn’t be subject to import taxes.
The hearing is referring to when Trump decided to impose 25% tariffs on Mexican and Canadian imports—along with 10% on goods coming from China—to encourage these nations to act on limiting illegal immigrants and fentanyl from entering the United States.9
He also issued reciprocal tariffs on countries that are running trade surpluses with the United States—which is when the value of its exports exceeds the value of its imports. This, at the time, included a flat 10% tax on imports, along with 34% tax on imports from China and 20% on the European Union.
Although tariffs on pharmaceuticals on a grander scale are expected to be forthcoming, the White House and EU did reach a deal10 that limits tariffs on pharmaceutical imports to 15%, which went into effect Sept. 1.
The development comes amid the multitude of changes that have transpired over the course of nearly eight beginning in early February, when President Trump announced that the US planned to approve a tariff of 25% or higher on pharmaceuticals. That number then skyrocketed to as high as 250%—a new high—which Trump had revealed in an interview with CNBC’s “Squawk Box.”10
Implications for generic drug makers
This leaves generic drug manufacturers with some difficult choices to make. In a recent video interview with Pharma Commerce, Brad Stewart, BDO’s national life sciences co-leader, described how generic drugs make up the majority of medications used in the United States, but they are highly vulnerable to shortages because many become sole-source products after their initial launch.
In this time of uncertainty, he recommends that pharma execs aim to mitigate risks by thinking about potential solutions from a global perspective. “The industry now is starting to think very strategically,” he said. “One challenge we have is we may not have all the information today to make the decisions that we need to, but we certainly have the tools available to build the model and forecast so that if someone says tomorrow, the tariff from this country or that country is going to be 22.1%, you can put that into the model and understand what impacts it's going to have on your business, and at least have the information necessary to make those decisions.”
For a timeline of key events from earlier in the tariff process, click here.
References
1. Hui Jie L, Constantino AK. US to Impose 100% Tariff On Branded, Patented Drugs Unless Firms Build Plants Locally, Trump Says. CNBC. September 25, 2025. Accessed September 26, 2025. https://www.cnbc.com/2025/09/26/us-to-impose-100percent-tariff-on-branded-patented-drugs-unless-firms-build-plants-locally-trump-says.html
2. Trump D. Truth Social. Trump Truth social post. September 25, 2025. Accessed September 26, 2025. https://truthsocial.com/@realDonaldTrump/posts/115267512131958759
3. Saraceno N. Trump’s MFN Drug Pricing Push Targets 17 Big Pharma Companies, Spurs Global Industry Response. Pharmaceutical Commerce. August 1, 2025. Accessed September 26, 2025. https://www.pharmaceuticalcommerce.com/view/trump--mfn-drug-pricing-17-big-pharma-companies-spurs-global-industry-response
4. Saraceno N. Eli Lilly to Invest $6.5 Billion in New Houston Manufacturing Facility. Pharmaceutical Commerce. September 24, 2025. Accessed September 26, 2025. https://www.pharmaceuticalcommerce.com/view/eli-lilly-invests-houston-manufacturing-facility
5. Saraceno N. Eli Lilly to Build $5 Billion Manufacturing Plant in Virginia, Expanding US Biopharma Capacity. Pharmaceutical Commerce. September 26, 2025. Accessed September 24, 2025. https://www.pharmaceuticalcommerce.com/view/eli-lilly-build-5-billion-manufacturing-plant-in-virginia
6. Saraceno N. Genentech Breaks Ground on $700M North Carolina Manufacturing Facility. Pharmaceutical Commerce. August 26 2025. Accessed September 26, 2025. https://www.pharmaceuticalcommerce.com/view/genentech-breaks-ground-700m-north-carolina-manufacturing-facility
7. Saraceno N. GSK Commits $30B to Strengthen US Biopharma R&D and Manufacturing Capacity. Pharmaceutical Commerce. September 18, 2025. Accessed September 26, 2025. https://www.pharmaceuticalcommerce.com/view/gsk-commits-30b-strengthen-us-biopharma-manufacturing-capacity
8. Amgen Announces $650M Expansion of US Manufacturing, Creating Hundreds of New Jobs. PR Newswire. September 26, 2025. Accessed September 26, 2025. https://www.prnewswire.com/news-releases/amgen-announces-650m-expansion-of-us-manufacturing-creating-hundreds-of-new-jobs-302567939.html
9. Saraceno N. Trump Pushes Supreme Court to Save Tariffs After Appeals Court Ruling Limits Presidential Power. Pharmaceutical Commerce. September 4, 2025. Accessed September 26, 2025. https://www.pharmaceuticalcommerce.com/view/trump-pushes-supreme-court-save-tariffs-appeals-court-ruling
10. Saraceno N. White House and EU Finalize Trade Deal With 15% Cap on Pharma Tariffs. Pharmaceutical Commerce. August 21, 2025. Accessed September 26, 2025. https://www.pharmaceuticalcommerce.com/view/white-house-eu-trade-deal-15-percent-cap-pharma-tariffs
11. Saraceno N. How Pharma Executives Can Prepare for Tariff Uncertainty. Pharmaceutical Commerce. July 25, 2025. Accessed September 26, 2025. https://www.pharmaceuticalcommerce.com/view/how-pharma-executives-prepare-tariff-uncertainty
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