US spares India's speciality drugs from tariff ahead of pharma duty hike
The US will not impose any ad valorem tariff on certain speciality drugs and related ingredients imported from India and 19 other countries, according to a notice published by the US Commerce Department. The move comes as Washington prepares to levy a 100 per cent tariff on certain patented pharmaceutical imports and associated ingredients from September 29.
The zero per cent rate will apply to products used in the treatment of rare medical conditions, as well as infertility treatments, cell therapies, gene therapies, antibody-drug conjugates and animal pharmaceuticals. Components used in these drugs will also qualify for the exemption.
An ad valorem tariff is a tax charged as a fixed percentage of the value of goods, according to the World Customs Organisation. The Commerce Department said the qualifying products from the listed jurisdictions can receive a zero per cent tariff because they have a current or forthcoming trade and security framework agreement with the US.
Besides India, the countries and regions placed in the zero-tariff category are 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.
On April 2, President Donald Trump issued a proclamation to impose tariffs on imports of patented pharmaceuticals, biologics and associated ingredients into the US as part of efforts to encourage domestic production. The exemptions form part of the implementation of that proclamation under Section 232 of the Trade Expansion Act.
The proclamation imposed a 100 per cent tariff on specified patented pharmaceuticals and ingredients. It took effect on July 31 for companies named in one annex and will apply to other covered companies from September 29.
The Commerce Department notice also said generic pharmaceutical products and their associated ingredients are not subject to the Section 232 pharmaceutical tariffs. It made several technical corrections to the original proclamation, including revising the definition of generic pharmaceutical articles to specifically include unpatented animal health products, and clarifying that pharmaceutical articles cover only finished pharmaceutical products, their active pharmaceutical ingredients and the key starting materials of such ingredients.
In effect, the US has exempted certain speciality drugs and their components from ad valorem tariffs for India and 19 other jurisdictions, even as it moves ahead with steep tariffs on specified patented pharmaceutical imports.
