When President Donald Trump announced his plan to impose 100% tariffs on patented medicines and ingredients imported into the United States, it included a provision that would allow drug companies that have not agreed to most-favored-nation (MFN) pricing agreements but are in the process of moving manufacturing to the United States to apply for a reduced rate of duty.
The Commerce Department released a document Wednesday explaining that to secure the 20% exemption, companies must disclose extensive information about their investments, production plans and compliance efforts.
Companies must submit onshoring plans, which are monitored and enforced by the Secretary of Commerce. Applicants will be required to submit periodic reports detailing their progress in achieving onshoring milestones.
The application also comes with a warning. Companies that “engaged in fraud” or “deliberately misled” the government regarding onshoring promises will be subject to a 100% tariff reimposition.
Companies are also being asked to apply to domesticate “as much of their global production as possible” by the end of President Trump’s term on January 20, 2029.
Mr Fiers did not receive immediate responses from several companies that had no MFN transactions and were likely applicants for the 20% duty exemption.
In the application, drug companies must report in detail what products they make, where they make them, and whether they use contract manufacturers. Companies are also required to clarify which portion of their portfolio is produced domestically, broken down by product, quantity, and value.
The application also asks companies to disclose by January 2029 what percentage of their patented medicines are made with APIs produced in the U.S. and the expected percentage in this category.
The deadline for submission is June 12th. The Department of Commerce says it will protect the confidentiality of the information contained in the application and that it will be distributed to employees as needed.
As specified in President Trump’s executive order, the 100% tariffs will go into effect on July 31st for large companies and on September 29th for small pharmaceutical companies.
In response to this guidance, consulting firm EY advised companies to assess “onshoring agreement eligibility and potential tariff reductions,” develop “detailed onshoring strategies including investment and production schedules,” and gather “required data and documentation across product portfolios and supply chains.”
