The news: New details on the Trump administration and European Union trade agreement solidify a 15% tariff cap on generics and active pharmaceutical ingredients, but leave questions on brand-name drug imports.

Zooming in: The 15% rate begins Sept. 1, but tariffs on branded products are still to be determined under a Trump proposal to establish most-favored nation (MFN) policies.

• Brand-name drugs will either carry the now-established 15% tariff rate or MFN pricing, whichever is higher, per a White House statement.
• A Trump executive order in May directed federal agencies to equalize US drug prices with other developed countries, but has yet to be resolved.
• President Trump previously threatened 200% tariffs on pharma imports, so investors interpreted the new details as a win for pharma companies. Stock prices of most of the largest companies like Eli Lilly, Johnson & Johnson, and AbbVie rose slightly.

Cutting through the noise: President Trump wants to compel pharma companies to agree to MFN pricing, but there is no deal yet. He sent letters to 17 pharma companies in late July, giving them 60 days to work with the administration on details.

The takeaway: Pharma companies can breathe a sigh of relief with the certainty of 15% EU tariffs and another reprieve, at least for now, on MFN pricing. Although the threat remains, the MFN deadline has already shifted once from June to September and could be moved again. That said, drugmakers should continue discussions while preparing for counter measures if needed such as US-only drug launches or raising prices abroad.

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