At 12:01 a.m. Eastern on Sept. 29, imported specialty drugs from 19 eligible trading partners and jurisdictions became tariff-free under Commerce Department guidance, a carve-out from the 100% tariff on patented medicines. The zero rate covers fertility, orphan, cell and gene therapy drugs, among other categories. Other patented drugs stay at 100%, and the notice says nothing about whether any savings reach patients.
Nine specialty categories from 19 jurisdictions qualify for the zero rate
The guidance, issued by Commerce’s Bureau of Industry and Security and published in the Federal Register on Sept. 23, sets “an ad valorem tariff rate of zero” for qualifying specialty pharmaceuticals. It lists nine categories: drugs whose approved indications are all designated orphan, nuclear medicines, plasma-derived therapies, fertility drugs, cell therapies, gene therapies, antibody-drug conjugates, medical countermeasures for chemical, biological, radiological and nuclear threats, and animal health products. The notice defines several tightly: orphan products are those designated for rare diseases or conditions, gene therapies are products intended to modify or manipulate the expression of a gene, and antibody-drug conjugates combine a small-molecule drug with an antibody. Fertility drugs cover products for treating infertility, including ovulatory dysfunction.
The eligible list names Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, India, Indonesia, Japan, Jordan, Malaysia, North Macedonia, the Republic of Korea, Switzerland and Liechtenstein, Taiwan, Thailand, the United Kingdom and Vietnam. That is 19 entries, though the European Union counts as one and Switzerland and Liechtenstein as one, so far more than 19 countries are covered in practice.
The rule turns on a condition beyond the drug type. Products qualify if they come from a jurisdiction with “a current or forthcoming trade and security framework agreement,” or if they meet an urgent U.S. health need. Companies can send information to the pharma232@bis.doc.gov mailbox, which BIS began receiving on Sept. 23, and the Federal Register notice lists Stephen Astle, director of the Defense Industrial Base Division, as its contact.
Other patented drugs stay at 100% while generics sit outside the tariff
The zero rate is a narrow exception. The same notice puts a 100% ad valorem tariff on standard patented pharmaceuticals, the rate set by the Section 232 proclamation on pharmaceutical imports that whitehouse.gov posted in April. That proclamation also lists lower rates for particular arrangements, including 15% for products from Japan, the European Union, South Korea and Switzerland and Liechtenstein, and 10% for the United Kingdom.
The proclamation describes still more paths. Companies with approved onshoring plans face 20% (rising to 100% on April 2, 2030), and participants in most-favored-nation pricing agreements pay 0% through January 20, 2029. The specialty carve-out from the September guidance is therefore one of several routes to a lower rate, and which route applies to a given brand-name drug depends on the maker and the country of origin.
Generic drugs are handled separately. The notice states that at this time the Section 232 pharmaceutical tariffs do not apply to generic pharmaceutical products and associated ingredients. That leaves the rule aimed at branded and specialty products, the category where a single product can cost far more than a common prescription and where import dependence varies by therapy.
The proclamation also offers a reason for the policy. It states that only 15 percent of patented active ingredients by volume are produced domestically, which the administration cites as a national security concern. The notice itself does not tie the specialty categories to that figure, and it does not explain why these nine were chosen.
What the guidance leaves open for what older Americans pay
Nothing in the notice sets or predicts a price. A tariff is a tax on importers, and whether a zero rate lowers what a pharmacy, hospital or insurer pays, or whether a 100% rate raises it, depends on manufacturer and distributor decisions that Commerce did not address. The guidance is about the border duty, not the prices seen at the pharmacy counter or on a plan’s formulary.
For Medicare beneficiaries, one cost limit sits in a different place. Medicare’s Part D annual out-of-pocket cap is $2,100 in 2026 and $2,400 in 2027, and the maximum deductible is $615 in 2026 and $700 in 2027, according to Medicare.gov. Spending up to the cap, including certain payments made on a beneficiary’s behalf such as through Extra Help, protects individual enrollees from unbounded drug costs regardless of any tariff.
The cap does not shield everything. Plans set premiums and can change formularies, so a manufacturer or insurer response to tariffs could show up in premiums, in which brand-name drugs a plan covers, or in the tier a drug sits on, rather than in a bill for the cap amount. Those effects would be visible only after plans publish their terms, and none has been tied to this guidance.
Scope is where the guidance is least settled. The 19 jurisdictions were selected by trade and security frameworks, not by drug need, so specialty products made elsewhere, or made by companies outside the listed frameworks, remain at 100% unless they meet the urgent health need standard. Where that line falls in practice will become clearer as BIS receives submissions and as manufacturers report which shipments actually cleared at zero.
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This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
