President Donald Trump said on Tuesday that all generic drugs entering the US will continue to have a tariff of 0% for two years starting from 1st August.
However, after the two-year period, the tariff rate will be raised to 100% for one year and then 200% the year after.
The President announced the proposed tariffs in a Truth Social post on Tuesday, adding that the move was done "in order to RESHORE Generic Pharmaceutical Production into America."
He warned of a penalty for those who "decide not to build Plant and Equipment within the stated period of time given to them."
According to FDA estimates, generics account for around 90% of prescriptions filled in the US.
Trump has consistently been pressuring drugmakers to lower their prices through the most-favored-nation drug pricing policy.
The tactic seems to be working. News reports followed on Wednesday morning that generics manufacturer Sandoz would engage with the US after the tariff threat, saying "We share the goal of improving affordability and access to medicines in the United States" in a statement.
In 2025, after the President first threatened tariffs on pharma companies, Eli Lilly kicked off a slew of announcements with a $27bn effort to expand domestic manufacturing of active pharmaceutical ingredients (APIs) and sterile injectables.
Brands such as Johnson & Johnson, Novartis, Roche and Novo Nordisk followed suit, pledging a total of more than $480bn in the next four to ten years.
Currently, there is no indication of whether the tariff plan will apply to biosimilars or be extended to include APIs.
It is also unclear what legal authority the President plans to use to impose the proposed tariffs on generic drugs, especially the anticipated 200% tariff, which is set to take effect in August 2029 — a few months after what is expected to be the end of his final term in office.
