US Drug Tariffs Take Effect…Korean ADC and Gene Therapies are 0%

US drug tariffs take effect…Korean ADC and gene therapies are 0%

Korean patented drugs are 15%…Pharmaceutical industry: "Impact will not be significant"

As the U.S. government officially imposes tariffs on pharmaceuticals and raw materials based on Section 232 of the Trade Expansion Act starting on the 29th (local time), some Korean-made drugs, such as Antibody-Drug Conjugates (ADCs), are expected to avoid tariff imposition.

According to the Korea Bio Association and the pharmaceutical industry, the Donald Trump administration signed a proclamation in April to impose tariffs on pharmaceuticals based on Section 232 of the Trade Expansion Act, citing national security and public health enhancement. Starting today, a 100% tariff will be imposed on patented pharmaceuticals and raw materials.

However, a 15% tariff rate will be applied to countries including Korea, the European Union (EU), Japan, and Switzerland.

Accordingly, Korean-made patented pharmaceuticals are expected to be subject to a 15% tariff.

In addition, the U.S. Department of Commerce announced on the 23rd a list of special pharmaceuticals that will be subject to a 0% tariff rate.

Special pharmaceuticals include ADCs, drugs designated for the treatment of rare diseases, cell and gene therapies, plasma-derived therapies, infertility treatments, and veterinary drugs.

The Department of Commerce plans to apply a 0% tariff rate if these drugs are produced in eligible jurisdictions such as Korea, the UK, Switzerland, and Japan, or if they are deemed urgently necessary for public health.

Generic drugs, biosimilars, and other synthetic and biologic replica drugs are not included in the scope of these new pharmaceutical tariffs.

The U.S. government decided in April not to immediately impose tariffs on generics and biosimilars, but to review the imposition status after one year.

Later, in August, President Trump announced that for generics, a 100% tariff would be imposed starting in 2028, and the tariff would be raised to 200% starting in 2029.

An official from the pharmaceutical industry said, "For the time being, I don't think the impact of the U.S. drug tariffs will be significant," adding, "ADCs and other similar drugs are still under development, so we cannot expect tax reduction benefits yet."