It marks another turn in Trump’s unpredictable trade policy, which has resulted in sweeping global tariffs and renewed brinkmanship with China. Still, Trump has yet to follow through on prior threats to slap new import taxes on drugs, and the investigation could prove to be yet another leverage play by the president. Trump has cajoled pharmaceutical companies to lower drug prices for US consumers, demanding they offer the best price for drugs or face consequences.
The president last month threatened to slap a 100% tariff on branded or patented medicines starting at the beginning of October unless manufacturers started to reshore production to the US. But Trump backed away from that proposal, as he and his advisers said they wanted to give companies more time to lower prices and open American factories.
US drug prices have been a focal point of Trump’s health-care agenda. In May, he signed an executive order calling on the pharmaceutical industry to cut costs to the lowest level paid by similar countries. Over the summer, he sent letters to 17 drugmakers insisting they immediately lower what they charge Medicare for existing medicines, giving them 60 days to comply.
Section 301 investigations focus on foreign governments, but the US Trade Representative can conduct parallel reviews of a common concern that relates to multiple countries. It did so during Trump’s first term, looking at the digital services taxes of multiple nations, including France and the UK.
Drug companies, for their part, appear to support Section 301 tariffs. AbbVie Inc. Chief Executive Officer Robert Michael said that the tariffs are something that can be used to address “unfair practices” related to international drug pricing.
“Clearly, I think the pharma companies alone cannot get it done,” he told investors at a Morgan Stanley conference in early September. “We do need partnership with the administration through trade negotiations to address these unfair practices. There are tools that are available to the president. Section 301, certainly something that can be employed to address these unfair practices.”
