The US Commerce Department has established zero-tariff arrangements for certain pharmaceutical drugs and essential ingredients used in their manufacture. India is also included in the list of 20 countries and territories from which eligible products can come under this facility. However, this discount will not apply to all medicines.
The US has cleared the way for zero import duty on certain medicines from 20 countries and territories, including India. In a notice issued in the Federal Register, the US Commerce Department’s Bureau of Industry and Security outlined the categories of pharmaceutical products that could receive zero tariffs.
However, this does not mean that every medicine shipped from India to the US has now become duty free. This feature is limited to certain types of drugs and their related pharmaceutical ingredients.
Which drugs will not be subject to tariff?
These pharmaceutical products are mainly included in the scope of zero-tariff.
- Orphan drugs are drugs used to treat rare diseases
- Nuclear medicine
- Plasma therapy
- Fertility drugs
- Cell therapy products
- Gene therapy product
- Antibody Drug Conjugates ie ADC
- Some medical countermeasures against chemical, biological, radiological and nuclear threats
- Some animal health products
Some of the relevant ingredients and essential commodities used in the manufacture of these drugs are also included in the zero-tariff regime.
What is an orphan drug?
An orphan drug is a drug or biological product designed to treat one or more rare diseases or conditions. In America’s new system, such appropriate drugs are placed in a special category.
Exemption to 20 countries including India
Apart from India, the US Commerce Department’s list includes Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, European Union, Guatemala, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland, Liechtenstein, Taiwan, Thailand, Britain and Vietnam. Eligible pharmaceutical products originating from these countries may be eligible for zero-tariff, provided they meet the prescribed conditions.
What is the matter of 100% tariff?
The US has announced the imposition of 100% ad valorem tariffs on certain patent pharmaceutical drugs and related goods. Ad valorem tariff means that a fixed percentage of import duty is imposed based on the value of the goods.
This tariff is being imposed on pharmaceutical imports under Section 232 of the Trade Expansion Act. However, according to the Department of Commerce, this pharmaceutical tariff under Section 232 is currently not applicable to generic drugs and their related products.
In the new system, the basis for granting zero tariffs to certain drugs is that they meet essential health needs of the US or that the US has an existing or future trade and security framework agreement with the relevant country.
How can companies take the exemption?
If a drug in a category that meets the essential health requirements of the United States requires a zero tariff, the company concerned must provide information about the product. This includes information such as the product’s classification, active ingredients, manufacturer, the country where the product is made, and its medical requirements in the United States.
The Commerce Department will decide on these requests on a case-by-case basis after consultation with the US Trade Representative and the Department of Health and Human Services.
The decision is significant for India as the US is a major market for Indian pharmaceutical exports. However, the benefit of zero-tariff will be available only to eligible drugs and products that fulfill the conditions mentioned in the notice.
