Trump May Exclude Generic Drugs From Tariffs. Good News For India?

The Donald Trump administration has dropped plans to impose tariffs on generic drugs from foreign countries, following months of debate over whether to impose taxes on the majority of medications prescribed in the US, according to a report by The Washington Post.

The report said that the move isn't final and could change in the coming weeks. However, the move comes as a relief to Indian drugmakers, who are the largest source of generic prescription medicines for the US market, and American consumers, who depend on these drugs.

According to IQVIA, a leading medical data analytics company, India supplies 47 per cent of all generic prescriptions filled in US pharmacies.

Earlier last month, President Trump announced levying 100 per cent tariffs on branded drugs from October 1, but didn't include generic drugs in the measure. The hike primarily targeted branded and patented drugs exported by multinational pharma giants such as Pfizer and Novo Nordisk.

The Washington Post reported that Trump postponed taking a call on tariffs on generic medications because it gave his administration more time to negotiate with pharmaceutical companies.

The drawdown comes as members of President Trump's Domestic Policy Council think that applying tariffs to generic medications would result in price increases and even drug shortages for consumers, the report said.

The council members also reportedly argued that tariffs might not work on generic drugs because they are so cheap to produce in countries like India that even very high tariffs might not make US production profitable.

Good News For Indian Pharma

The US market accounts for slightly more than a third of India's pharmaceutical exports, which comprise mainly cheaper generic versions of popular drugs. About $20 billion worth of generic medications are reportedly shipped to the US annually by Indian companies. 

Indian generic medications sold in the US market help keep the cost of medications within the reach of US consumers by providing less expensive alternatives to these branded medications for the treatment of conditions ranging from diabetes to cancer.