The news: The Trump administration will opt against imposing tariffs on generic drug imports, according to The Wall Street Journal.

Catch up quick: President Donald Trump has threatened a range of tariff rates on brand-name drugs imported from other countries, particularly for pharma companies that don’t invest more in US manufacturing plants.

Generics have been rumored to be spared from tariffs. But there is some concern within the government that the US’ overreliance on international trade for generic drugs could backfire in the case of a geopolitical crisis or other global event that causes supply chain disruptions.

• 35% of ingredients used in generic drugs for the US come from India, per a US Pharmacopeia analysis of 2024 imports. Nearly 20% are from the EU. The US produces only 12%.
• Generics make up about 90% of US prescriptions and are vital to administering medications to patients in hospitals.

Some senators have warned that a global emergency could hinder US hospitals and doctors’ offices from obtaining needed generics. They also assert that the US has the capability to produce more generics.

Yes, but: Forcing companies that make generics to produce more of their products domestically likely wouldn’t have the same impact as it would for brand-name drugs.

Manufacturers of branded medications have the capital to invest billions in US production capacity, and many have announced recent pledges to do so. But leading generic drugmakers like Sandoz and Teva have said that they can’t afford to build expensive manufacturing facilities in the US like high-margin brand-name drug companies, per a recent Bloomberg report.

The final word: Trump’s reprieve for generic drugmakers signals that brand-name medication imports won’t be spared from tariffs. The administration wants to get more commitments from pharmas to invest in US manufacturing but likely realizes that threatening generic drugmakers with tariffs wouldn’t work and could result in some players exiting the US market. The FDA is separately rolling out a program to prioritize the review of abbreviated new drug applications from generic drug companies that test and make their products in the US.

Big Pharma brands that want to avoid Trump tariffs will have to follow Pfizer’s lead in striking deals with the administration. That will include lowering prices and cutting out industry middlemen like PBMs and insurers for some drugs and immediately starting to build more US manufacturing capability.

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