US Waives Tariffs On Specialty Drugs From India, 19 Other Countries

The US will not charge any ad valorem tariff on certain speciality drugs and associated ingredients used for treatment of rare medical conditions imported from India and 19 other countries.

An ad valorem tariff is a set percentage of the monetary value of the goods to be taxed, according to the World Customs Organisation.

The US Commerce Department published the list of countries in the Federal Register as it prepares to impose a 100 per cent tariff on certain patented pharmaceutical imports and their associated ingredients from September 29.

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.

Eligible products for the zero per cent tariff rate include all drugs designated for rare diseases, infertility treatments, cell therapies, gene therapies, antibody-drug conjugates (ADCs), and animal pharmaceuticals. Components of these drugs are also subject to a zero per cent tariff rate.

Besides India, the other countries in the zero tariff rate 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.

The notice said qualifying products from these jurisdictions could receive a zero per cent tariff because they have a current or forthcoming trade and security framework agreement with the US.

The exemptions are part of the implementation of Trump's April proclamation adjusting imports of pharmaceuticals and pharmaceutical ingredients 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.

Generic pharmaceutical products and their associated ingredients are not subject to the Section 232 pharmaceutical tariffs, according to the Commerce Department notice.

The notice also makes several technical corrections to the original proclamation, including amending the definition of “generic pharmaceutical articles” to specifically include unpatented animal health products.

It also clarifies that the definition of “pharmaceutical articles” only encompasses finished pharmaceutical products, their active pharmaceutical ingredients, and the key starting materials of such ingredients.

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