US President Donald Trump has signed an executive order that could impose tariffs of up to 100 percent on certain patented medicines if pharmaceutical companies fail to reach agreements with his administration in the coming months.
Under Thursday’s order, companies that sign a “most favoured nation” pricing agreement and are actively investing in and building manufacturing facilities in the United States will be exempt from tariffs, Al Jazeera reported.
Companies that have not signed such agreements but are developing facilities in the US will face a 20 percent tariff, rising to 100 percent over four years.
A senior administration official said companies still have several months to negotiate before the higher tariffs take effect, with larger firms given 120 days and smaller ones up to 180 days to reach agreements.
The official added that the administration has reached 17 pricing deals with major pharmaceutical companies, 13 of which have been signed, although no specific firms or drugs potentially subject to tariffs were identified.
In the executive order, Trump said the measure was necessary to address threats to national security posed by reliance on imported medicines and pharmaceutical ingredients.
The decision has drawn criticism from industry leaders. Stephen J. Ubl, CEO of the pharmaceutical trade group PhRMA, warned that tariffs on advanced medicines could increase costs and jeopardize billions of dollars in US investment.
The order coincides with the first anniversary of Trump’s “Liberation Day,” when sweeping import tariffs were announced on nearly all countries, unsettling global markets. Some of those tariffs were later overturned by the Supreme Court.
Since the start of his second term, Trump has repeatedly threatened steep tariffs on imported drugs while also using them as leverage to secure lower prices from major companies, including Pfizer, Eli Lilly and Bristol Myers Squibb.
In addition to company-level agreements, several countries have negotiated trade frameworks with the United States to limit pharmaceutical tariffs.
The European Union, Japan, South Korea and Switzerland will face a 15 percent tariff on patented drugs, while the United Kingdom will initially face a 10 percent rate, expected to fall to zero under future trade agreements.
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