Shares of Apotex Inc., Canada's largest drug maker, fell Wednesday after President Donald Trump said the U.S. plans to tariff generic drugs made in foreign countries.Sammy Kogan/The Globe and Mail
U.S. President Donald Trump is threatening large tariffs on generic drugs that are not made in the United States, potentially complicating recent efforts by Canada’s government to boost domestic production of pharmaceuticals.
Late Tuesday, Mr. Trump posted on social media that his administration would impose 100-per-cent tariffs on generic pharmaceuticals starting on Aug. 1, 2028, a figure that would rise to 200 per cent a year later.
“This is done in order to RESHORE Generic Pharmaceutical Production into America, with a penalty to those Companies that decide not to build Plant and Equipment within the stated period of time given to them,” Mr. Trump’s post said.
It is the latest in a series of measures that the Trump administration has taken to try to boost domestic drug production. In June, the administration announced that seven drug companies would participate in a pilot to get speedier regulatory review for new manufacturing facilities.
But a tariff on generic drugs would hit Canada’s industry particularly hard, as most Canadian production is in generics.
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Canada sent around US$6.75-billion worth of pharmaceuticals to the United States in 2023, of which about US$3-billion was finished drugs, according to a study published in the Journal of the American Medical Association last year. Of the Canadian-made drugs exported to the U.S., 79 per cent were generics.
Shares of Apotex Health Corp. APTX-T, Canada’s largest drug maker, were down 8 per cent Wednesday. Other international generic producers were also lower, with Swiss drug maker Sandoz Group AG off 4 per cent and Israel’s Teva Pharmaceutical Industries Ltd. also down 4 per cent.
National Bank analyst Nathan Po said in a research note Wednesday that about 89 per cent of U.S. prescriptions were filled with generic drugs. He said Apotex has estimated that about 70 per cent of generic drug volume is imported from other countries, including from Canada.
Jim Keon, president of the Canadian Generic Pharmaceutical Association, said Canada and the U.S. have spent decades building an integrated pharmaceutical supply chain.
“Trade barriers on essential medicines are not in the interests of patients, health care systems or either country’s long-term health security,” he said.
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The tariff threat complicates Ottawa’s own recent efforts to speed up drug approvals and encourage more domestic production of pharmaceuticals.
Last week, the federal government launched consultations about two measures related to drug approvals.
The first would see Health Canada rely on the work of foreign regulators when reviewing applications for certain patented drugs. The regulator published a proposal for this measure in January, and has now moved forward through the publication of what’s called a ministerial reliance order.
For the first time, Health Canada has now outlined which specific foreign regulators it will rely on – including the U.S. Food and Drug Administration, the European Medicines Agency and Australia’s Therapeutic Goods Administration – and which specific types of drugs, largely pediatric medicines for conditions such as tuberculosis and epilepsy.
The pathway would also apply to all veterinary drugs, although the comparable foreign regulator varies.
Separately, Health Canada announced a proposed pilot project that would see generic drug submission get priority if manufacturing was primarily done in Canada. Health Canada said the project would be a “workload management measure only,” wherein the review process itself remains the same but applications from domestic manufacturers could be picked up before submissions from other companies.
The notice said the project would be “targeted” and “time-limited,” although details of those limits were not published.
The government is taking public comment on both measures until Sept. 12.
The office of Health Minister Marjorie Michel said the proposals reduce burdens for drug makers while still upholding Canada’s safety standards.
“By modernizing our approach and working with trusted international partners, we can make our system more efficient, reduce red tape, and encourage more manufacturers to bring their products to Canada,” said spokesperson Alexandre Bergeron. He did not specifically address the proposed U.S. tariffs.
Details of the tariffs have not been made public. The White House has not yet released an executive order explaining under what legal authority the tariffs would be imposed.
The U.S. Supreme Court struck down much of the administration’s tariffs in February that targeted countries, while sectoral tariffs − such as those on steel and aluminum − have survived legal review.