Yesterday, April 16, 2025, the Bureau of Industry and Security (BIS), a bureau within the U.S. Department of Commerce, published a “Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Pharmaceuticals and Pharmaceutical Ingredients.”
As background under Section 232 of the Trade Expansion Act of 1962, if the BIS investigation concludes that excessive foreign imports are a threat to national security, the President may levy tariffs on those imports. This has been the route President Trump has utilized for recent tariffs including, for example, on steel and aluminum.
President Trump has previously announced an intention to impose tariffs on pharmaceuticals, and this BIS investigation appears to be intended to establish the groundwork to do so under Section 232.
The scope of the investigation covers pharmaceuticals and pharmaceutical ingredients, including finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, and key starting materials, and derivative products of those items. The public is invited to provide comments, including data, analyses, or other relevant information, by May 7. Though not limited to these topics, BIS has particular interest focused on nine questions that broadly can be grouped into:
- U.S. needs and capabilities (both current and future),
- foreign supply chains, and
- the possibility (either real or potential) for foreign actors to influence the availability or price of these products.
Of course, there is also solicitation for comments on whether additional controls (including tariffs and/or quotas) are needed to protect national security.
FDA regulations require a prior approval for changes in facilities and such an approval requires qualification of the manufacturing process in the facility. The time to manufacture new facilities, qualify them, prepare applications, and get FDA approval to increase manufacturing in the U.S. might require years to achieve.
As described elsewhere, increased prices could eat into brand name drug’s profitability (if not passed on to consumers), but generics, which make up approximately 90% of U.S. drug sales and have very thin profit margins with a limited ability to raise prices. Tariffs may, therefore, force many generic drug manufacturers to choose between operating at a loss or leaving the U.S. market. If these companies leave the U.S. market, the industry predicts it will result in drug shortages. We note that companies contemplating a disruption in supply to the U.S. may need to report this anticipated disruption to the FDA.
We continue to track this issue.
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