The United States will not impose ad valorem tariffs on certain speciality drugs and related ingredients imported from India and 19 other countries. The exemption covers medicines used to treat rare medical conditions and other specified therapies. An ad valorem tariff is a tax charged as a fixed percentage of the value of imported goods, according to the World Customs Organisation.

The US Commerce Department published the list of eligible countries in the Federal Register as Washington prepares to impose a 100 per cent tariff on certain patented pharmaceutical products and their associated ingredients from September 29.

The tariff policy follows a proclamation issued by President Donald Trump on April 2. The proclamation seeks to increase domestic pharmaceutical production by imposing tariffs on imports of patented pharmaceuticals, biologics and related ingredients under Section 232 of the Trade Expansion Act.

The products eligible for the zero per cent tariff include all drugs designated for rare diseases, infertility treatments, cell therapies, gene therapies and antibody-drug conjugates (ADCs). Animal pharmaceuticals are also covered. Components used in these medicines will also qualify for the zero tariff rate.

Other than India, Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland, Liechtenstein, Taiwan, Thailand, Britain and Vietnam are also granted zero tariffs.

The Commerce Department notice said qualifying products from these jurisdictions can receive the zero per cent tariff rate under current or forthcoming trade and security framework agreements with the US.

The exemptions form part of the implementation of Trump's April proclamation covering imports of pharmaceuticals and pharmaceutical ingredients under Section 232. The proclamation introduced a 100 per cent tariff on specified patented pharmaceutical products and their associated ingredients.

The tariff took effect on July 31 for companies listed in one annex of the proclamation. It will apply to other covered companies from September 29.

According to the Commerce Department notice, generic pharmaceutical products and their associated ingredients will not face the Section 232 pharmaceutical tariffs.

The latest notice also introduces several technical changes to the original proclamation. It amends the definition of “generic pharmaceutical articles” to specifically include unpatented animal health products.

The notice also clarifies the scope of “pharmaceutical articles”. The definition covers finished pharmaceutical products, their active pharmaceutical ingredients and the key starting materials used to produce those ingredients.