U.S. President Donald Trump has introduced the “Section 232 pharmaceutical tariffs,” imposing up to 100% tariffs on patented drugs while simultaneously reforming the rebate system of Pharmacy Benefit Managers (PBMs). The policy aims to lower drug prices and incentivize pharmaceutical companies to relocate manufacturing back to the United States. Derived from Trade Expansion Act Section 232, the measure invokes national security to intervene in pharmaceutical supply chains, reflecting strong economic and geopolitical intent. According to industry observers, high drug prices in the U.S. stem largely from PBM rebate practices and market concentration. Three major conglomerates control around 80% of the market, making the U.S. a global benchmark for drug pricing.
Under the policy design, tariffs initially target patented brand-name drugs, while generics are granted a one-year exemption. An onshoring plan mechanism is also introduced to allow tariff reductions. According to Industry observers, for pharmaceutical companies, investing in U.S.-based manufacturing is more cost-effective than paying sustained high tariffs, accelerating global supply chain restructuring. Many multinational firms are currently negotiating with the U.S. government to mitigate tariff impacts.
From Taiwan’s perspective, Chiang Chih-kang, Director General of the Taiwan Food and Drug Administration (TFDA), stated that the government will maintain close communication with industry stakeholders and provide support measures, while coordinating with the National Health Insurance Administration (NHIA) to initiate Health Technology Assessment (HTA) if needed. While Taiwan’s pharmaceutical exports to the U.S. consist primarily of generics—meaning the short-term impact remains limited—long-term risks persist on the import side. According to data from the Taiwan Generic Pharmaceutical Association, brand-name drugs account for over 70% of Taiwan’s National Health Insurance (NHI) drug expenditures, highlighting a deep-seated dependency on high-priced imported medications.
Shen Tsai-ying, President of the Grassroots Pharmacists Association, warned that rising production costs due to U.S. reshoring will likely lead to global price increases. Drugs for cancer and rare diseases will be the first to be affected, which could further strain Taiwan's NHI system. She also cautioned that if generics lose export profitability, some manufacturers may halt production, potentially disrupting medication access for chronic disease patients in Taiwan.
Overall, the policy is expected to trigger a global chain reaction through pricing and supply chain restructuring. Industry experts emphasized that the pharmaceutical market is similar to the semiconductor industry: rising costs will ultimately be passed on to worldwide healthcare systems—“the cost will be borne by the consumers themselves.” In this context, Taiwan must not only leverage HTA and reimbursement mechanisms to manage spending, but also seize this opportunity to strengthen domestic generic manufacturing and enhance supply chain resilience amid growing uncertainty.
【2025-04-9/ Economic Daily News】
