India Gets US Pharma Tariff Exemption, But Which Drugs Still Face Trump’s 100% Duty?

Washington: The United States has exempted select pharmaceutical products and related components originating from India and 19 other partner jurisdictions from import duties, even as Washington moves ahead with a 100 per cent tariff on specified patented pharmaceutical products.   

The US Commerce Department has formally listed the countries eligible for the zero-duty treatment in the Federal Register. The exemption covers specific categories of medicines and the key components used to manufacture them, but does not amount to a blanket waiver for Indian pharmaceutical exports.

Which Medicines Get The Zero-Duty Treatment?

The duty-free categories include medicines used to treat rare diseases and fertility-related conditions, advanced cell and gene therapies, antibody-drug conjugates (ADCs) and veterinary pharmaceuticals. The zero percent tariff rule also applies to components used in the manufacturing of certain medications.

The partnership includes 20 jurisdictions, including India. Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland, Liechtenstein, Taiwan, Thailand, Britain, and Vietnam are the other countries.

Qualifying items exported from these countries under a current or future trade and security framework agreement with the United States are excluded. Ad valorem tariffs are described as "a specified percentage of the monetary worth of the products to be taxed" by the World Customs Organization.

What Happens To Patented Medicines?

The primary contrast is between other patented pharmaceutical items and those protected by the exemption. Unless they are eligible for alternative tariff treatment or exemption, the US's 100% duty still applies to certain patented medications and pharmaceutical substances covered under the Section 232 tariff regime. Section 232 of the US Trade Expansion Act of 1962 was used to impose the tariff.

This indicates that the 100% levy does not fully shield Indian pharmaceutical exports. Unless another exemption or tariff treatment exists, patented medications that do not fit within the designated zero-duty categories may nevertheless be subject to the tariff.

President Donald Trump's April ruling on imported pharmaceuticals and related chemical components is the source of the action. In an attempt to promote pharmaceutical manufacture in the United States, the April 2 proclamation imposed a 100% tariff on some patented medications, biologics, and related ingredients.

For businesses listed in an initial appendix, the tariff went into force on July 31. On September 29, it will be extended to additional businesses covered by the regime.

Generic Drugs Remain Outside Section 232 Tariffs

Under the US tariff structure, generic medications are treated differently. The Commerce Department has verified that the Section 232 pharmaceutical tariffs do not apply to generic pharmaceutical items or the chemicals that go along with them. This indicates that covered patented medications and related chemicals are the main target of the 100% levy, not generic medications.

The extent of the pharmacological categories is also made clearer by the most recent administrative modifications. The term "generic pharmaceutical articles" has been revised to encompass unpatented animal health goods.

In parallel, the term "pharmaceutical products" has been defined more narrowly to include active pharmaceutical components, finished medications, and essential raw materials. Excipients and inactive substances are not included.

The April declaration may also grant alternative tariff treatment to businesses with authorized agreements to relocate manufacturing to the United States. Therefore, the most recent exemption maintains the more general 100% tariff system for covered patented products while establishing a zero-duty path for specific pharmaceutical categories from India and the other participating jurisdictions.