South Korean media: US plans to exempt generic drugs from tariffs, South Korea's biopharmaceutical industry gets a reprieve
According to reports, the Trump administration in the United States is planning to exclude generic drugs from the list of drug tariffs. Previously, Trump had announced that a 100% tariff would be imposed on all imported medicines.
On the 8th (local time), according to a report by The Wall Street Journal (WSJ), White House deputy spokesperson Kush Desai stated, "The government is not currently actively discussing imposing tariffs on generic drugs under Section 232 of the Trade Expansion Act." The U.S. Department of Commerce, which is responsible for tariff investigations, also stated, "This tariff investigation does not involve imposing additional tariffs on generic drugs." However, the media also pointed out that this plan has not been finalized and there are still uncertainties.
Trump had announced on the 25th of last month through his personal social media platform "truth Social" that starting from the 1st, a 100% tariff would be imposed on brand-name and patented drugs produced by pharmaceutical companies that do not have factories in the United States. However, the tariff plan was subsequently postponed due to negotiations between the government and major pharmaceutical companies. At the beginning of this year, Trump had instructed the Department of Commerce to conduct a tariff investigation on medicines based on Section 232 of the Trade Expansion Act, and the Department of Commerce has been implementing this work since April.
Generic drugs refer to drugs that replicate the performance and efficacy of original drugs after their patents expire. These drugs account for as much as 90% of the drug consumption of American citizens, but their supply is largely dependent on imports. Trump had mentioned generic drugs in a campaign video in 2023, stating, "To encourage the production of all essential medicines to return to the United States, we will introduce tariffs and import restrictions in stages."
It is widely believed that the Trump administration's exemption of tariffs on generic drugs is due to concerns about the chain reaction of rising drug prices. According to a report by The Wall Street Journal, opponents within the government who are against imposing tariffs on generic drugs are worried that once tariffs are added, rising drug prices and supply disruptions are inevitable. Some opinions point out that since nearly half of the generic drugs in the U.S. market are produced in India and China, even with high tariffs, it would be difficult to make domestic production cost-effective. The report also said that the Trump administration has been discussing for months the role that tariffs could play in promoting the return of generic drug production.
In addition to tariffs, the Trump administration is also preparing other supportive policies to attract the return of generic drug production. It is reported that Trump is considering using executive orders to provide subsidies or loans to companies producing generic drugs in the United States. According to a report by The Wall Street Journal, the U.S. is also discussing using part of the funds obtained from tariff negotiations with countries such as Japan as an investment source.
Additionally, this retreat by the Trump administration on the issue of generic drug tariffs has given South Korea's relevant industries a temporary reprieve. Last year, South Korea's exports of medicines to the U.S. amounted to 1.49 billion dollars, which accounted for only 1.1% of its total exports to the U.S. (127.8 billion dollars), but it is significant in the biotechnology industry. Last year, the U.S. accounted for 18.8% of South Korea's medicine exports, making it the largest export market for South Korean medicines. Therefore, large South Korean pharmaceutical and biotechnology companies such as Celltrion have already started to acquire U.S. factories to avoid potential tariff barriers.
Source: JoongAng Ilbo
Original article: www.toutiao.com/article/1845561169363210/
Statement: This article represents the views of the author.