The 100% Tariff on Brand-Name Drugs Hits Every Importer on Sept. 29. Will Your Prescriptions Cost More?
- The April 2, 2026 proclamation set a 100% tariff on imported patented drugs and their active ingredients under Section 232.
- It took effect July 31 for 17 named drugmakers. From September 29, 2026, it applies to all other importers.
- 13 of the 17 have drug-pricing (MFN) deals and pay 0% until January 20, 2029. Companies with approved US onshoring plans pay 20%.
- Drugs from the EU, Switzerland, Japan and South Korea pay 15%; the UK pays 10%.
- Generics, biosimilars, orphan drugs, cell and gene therapies, plasma-derived therapies, fertility treatments and several other categories are excluded.
The second deadline
In April, the US announced a tariff of up to 100% on imported brand-name drugs. It started on July 31 for the 17 biggest drugmakers, including Pfizer, Johnson & Johnson, Merck, Eli Lilly, AbbVie, Amgen and several European giants.
On Tuesday, September 29, it reaches everyone else: every company importing a patented drug or its active ingredient into the United States.
Who actually pays 100%?
Fewer companies than the headline suggests. The rate depends on who makes the drug and where:
| Situation | Tariff |
|---|---|
| Default for imported patented drugs and ingredients | 100% |
| Company with a Commerce-approved US onshoring plan | 20% |
| Onshoring plan plus a drug-pricing (MFN) deal | 0% until Jan. 20, 2029 |
| Made in the EU, Switzerland, Japan or South Korea | 15% |
| Made in the UK | 10% |
| Generics, biosimilars, orphan drugs and other excluded categories | Not covered |
Of the 17 companies named in the first wave, 13 already had pricing deals and pay 0%. The full 100% mainly applies to patented drugs made in countries without a trade deal, by companies without a pricing deal or onshoring plan. Canada, for example, isn't among the countries with a reduced rate in the proclamation.
Will drug prices go up?
For most patients, probably not much, at least not soon:
- Generics are exempt. Generics fill the large majority of US prescriptions.
- Big brands are mostly covered by deals. The largest drugmakers pay 0% or 15%.
- Insurance buffers patients. Your copay is set by your plan, not directly by the drug's import cost.
The pressure lands on brand-name drugs from smaller importers without deals. Those companies must absorb the tariff, raise prices, or move production to the US. Over time, some of that cost could show up in insurance premiums.
Why the "deals" matter more than the tariff
The tariff works mostly as leverage. Companies avoid it by agreeing to:
- Most-favoured-nation (MFN) pricing: tying some US prices to what other wealthy countries pay.
- US manufacturing: committing billions to American factories.
For investors, those concessions are the real cost. Lower US prices reduce profits in the world's most profitable drug market. Factory spending uses cash that could otherwise fund dividends and buybacks.
Which healthcare stocks are exposed
Most protected: large US and European drugmakers with pricing deals. Their tariff risk is low until January 2029.
More exposed: smaller biotech and specialty pharma companies that import patented drugs and have no deal. A 100% duty on a key product could wipe out its US profit.
Possible winners:
- US contract manufacturers that make drugs for other companies
- Generic drugmakers, whose products are exempt and may win share if brand prices rise
- Builders and equipment suppliers for new US pharma plants
Your index funds: healthcare is roughly a tenth of the S&P 500. The tariff is a risk for specific companies, not the whole sector.
For the European side of the story, see Europe's Pharma Giants Mostly Pay 0% to 15%.
What to watch
- New MFN deals. More companies may sign before or soon after September 29 to cut their rate.
- Onshoring announcements. A Commerce-approved plan cuts the rate to 20%.
- Earnings calls in October and November. Listen for "tariff" in guidance, especially from mid-size drugmakers.
- Legal challenges. Section 232 tariffs rest on national-security authority, which courts have generally treated more favourably than other tariff powers.
The honest uncertainty
The drug-tariff rules have changed several times since April, and deals are still being struck. The biggest long-term question isn't the tariff rate; it's how much US drug prices fall under MFN deals and what happens when the 0% window closes in 2029. For now, the September 29 deadline is a bigger deal for smaller drug companies than for your prescriptions.
Frequently asked questions
What happens on September 29, 2026 with drug tariffs?
The US Section 232 tariff on imported patented pharmaceuticals, which started July 31 for 17 large drugmakers, extends to all other importers. The default rate is 100%, but reduced rates apply for products from countries with trade deals and for companies with pricing agreements or US manufacturing plans.
Will the pharmaceutical tariffs make my prescriptions more expensive?
For most people, probably not much in the short term. Generic drugs, which fill the large majority of US prescriptions, are exempt. Most large brand-name drugmakers pay 0% under pricing deals or 15% or less under trade agreements. Brand-name drugs from smaller importers without deals are the most likely to see cost increases, and insurance design determines how much reaches patients.
Are generic drugs subject to the tariff?
No. Generics and biosimilars, and their ingredients, are excluded from the Section 232 pharmaceutical tariff.
Which healthcare stocks are most affected by the pharma tariffs?
Large drugmakers with pricing deals are largely protected until 2029. Smaller biotech and specialty pharma companies that import patented drugs without a deal are more exposed. Companies building US factories, and contract manufacturers that make drugs in the US, could benefit from the push to onshore production.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Sep 26, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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