July 31 came and went. The deadline arrived on schedule, and so did the tariff. Section 232 of the Trade Expansion Act now applies a 100% duty on patented drugs and their active ingredients, and the first wave of manufacturers is already paying it. Seventeen large drugmakers named in the proclamation’s Annex III crossed the line on July 31. Every other importer follows on September 29.
The mechanics reward speed. A manufacturer with an approved onshoring plan pays 20% instead of 100%. Add a signed most-favored-nation pricing deal with HHS, and the rate drops to zero through January 2029. Pfizer locked in exactly that combination, a $70 billion domestic investment commitment bought a three-year exemption. Companies still negotiating in June faced the full 100% by summer’s end.
The onshoring race is real money, not posturing
Big Pharma answered the tariff threat with the largest reshoring wave the industry has seen. Drugmakers have pledged roughly $500 billion toward new and expanded U.S. manufacturing and R&D, by Reuters’ count in August. Plants that once took a decade to plan are now breaking ground in a season.
- J&J at $55 billion
- Roche and AstraZeneca at $50 billion each
- Bristol Myers Squibb at $40 billion
- Lilly at $50 billion, including $27 billion for four new sites
- Novartis at $23 billion
None of it lands evenly. A drug’s tariff exposure now depends on where it’s made, who makes it, and how far along that manufacturer’s onshoring deal happens to be. The lowest-cost option in a therapeutic category this June can trade places with a competitor by September once a tariff works its way through list price and rebate contracts.
Generics just entered the picture too
For years, generics sat outside the tariff conversation entirely, and nine of every ten U.S. prescriptions run through that category. That changed on July 21, when the administration announced a separate phased tariff plan for imported generics: a 0% rate for two years starting August 1, 2026, climbing to 100% in 2028 and 200% in 2029. Generic manufacturing carries thin margins already. A rate that quadruples in three years gives the whole supply base a reason to relocate, consolidate, or exit. And, that gives every formulary a reason to watch the base closely.
A formulary set once a year can’t track a market that moves every month
Static formularies lock in preferred drugs, review annually, and assume the landscape holds still between reviews. This landscape doesn’t hold still. It reprices itself in real time as onshoring plans clear, MFN deals get signed, and generic manufacturers decide where to build next.
The RazorCodex™ was built for exactly this kind of shift. It scans pricing signals across millions of members continuously and surfaces the lowest-cost, clinically appropriate option the moment conditions change—then puts that option directly in front of the prescriber, who makes the final call. AI does the searching; physicians make the decision. That combination already cuts client drug spend by up to 10% a year, and it means a tariff-driven repricing shows up on a RazorMetrics formulary within days, not at next year’s renewal.
Tariff policy will keep moving through the fall with new onshoring approvals, new MFN deals, the first generic rate hikes still two years out but already shaping manufacturer decisions today. A formulary that reviews annually will always be explaining last quarter. RazorMetrics clients see the shift as it happens, because savings only count if they show up while the window is still open.
