Executive summary

The United States (US) Department of Commerce, Bureau of Industry and Security (BIS) issued a notice on 22 September 2026 that gives operational content to the specialty pharmaceutical carve-outs contemplated by Presidential Proclamation 11020, Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients Into the United States (91 FR 18183), issued 2 April 2026.

The notice does three things. First, in consultation with the Food and Drug Administration (FDA) and the US Department of Agriculture Center for Veterinary Biologics, it defines each of the product categories listed in clause 3(d) of the Proclamation. Second, it identifies the jurisdictions with products eligible for the clause 3(d) tariff adjustment. Third, it establishes the procedure by which a company may seek Commerce Department approval on the alternative basis that an import meets an urgent US health need.

The 100% ad valorem tariff on covered patented pharmaceutical products and associated ingredients has applied since 31 July 2026 for the companies listed in Annex III of the Proclamation and takes effect 29 September 2026 for all other companies. The BIS has stated that it needs time to receive and evaluate urgent health-need requests in advance of that date and invoked emergency Paperwork Reduction Act clearance procedures on that basis. Companies with potentially eligible products therefore have a narrow window within which to assemble and submit requests.

Background

Proclamation 11020 concurred with the Secretary of Commerce's finding that pharmaceuticals and associated pharmaceutical ingredients are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security and imposed tariffs under Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862). Different rates apply to patented pharmaceutical products and associated ingredients from certain jurisdictions and from companies holding Commerce-approved onshoring agreements. The Section 232 pharmaceutical tariffs do not, at this time, apply to generic pharmaceutical products and associated ingredients.

Clause 3(d) directed a 0% ad valorem rate for a defined set of specialty pharmaceutical products, and for animal health products, provided the Secretary determines either that the goods are products of a jurisdiction with a current or forthcoming trade and security framework agreement as referenced in Executive Order 14346 (90 FR 43737), or that they meet an urgent US health need.

For more on Proclamation 11020, see EY Global Tax Alert, US Section 232 proclamation imposes up to 100% tariffs on patented pharmaceuticals and active pharmaceutical ingredients, dated 3 April 2026.

Definitions of the clause 3(d) categories

The definitions (1) apply solely for purposes of determining eligibility under Proclamation 11020, are not binding guidance for any other purpose, (2) cover investigational drugs as well as FDA-approved or FDA-authorized drugs, and (3) may be modified by Commerce in the future. In summary:

• Drugs for which all approved or licensed indications are designated as "orphan" are drugs or biological products designated under Section 526 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 360bb) for one or more rare diseases or conditions, and for which all indications approved under Section 505 of the FD&C Act (21 U.S.C. 355) or licensed under Section 351 of the Public Health Service Act (PHSA) (42 U.S.C. 262) are for one or more such rare diseases or conditions.
• Nuclear medicines are drugs meeting the definition of "radioactive drug" in 21 CFR 310.3(n) or biological products meeting the definition of "radioactive biological product" in 21 CFR 600.3(ee).
• Plasma-derived therapies are biological products derived from human whole blood or plasma (42 U.S.C. 1320f-1(e)(3)(C)).
• Fertility drugs are drugs or biological products for the treatment of infertility, including drugs approved for the treatment of ovulatory dysfunction in women desiring pregnancy.
• Cell therapy products are biological products that include cellular immunotherapy, cellular cancer vaccine, or other autologous or allogeneic cellular products approved for one or more therapeutic indications, including hematopoietic stem cell products and adult and embryonic stem cell products.
• Gene therapy products are biological products intended to modify or manipulate the expression of a gene, or to alter the biological properties of living cells, for therapeutic use.
• Antibody drug conjugates are combination products composed of a small-molecule drug payload and an antibody or antibody fragment, conjugated by a chemical linker.
• Chemical, biological, radiological, or nuclear threat (CBRN) medical countermeasures are drugs as defined in Section 201(g) of the FD&C Act (21 U.S.C. 321(g)(1)) or biological products as defined in Section 351(i) of the PHSA (42 U.S.C. 262(i)) used to diagnose, prevent or treat diseases or conditions caused by chemical, biological, radiological or nuclear agents, including emerging infectious diseases. The category includes qualified countermeasures, qualified pandemic or epidemic products, and security countermeasures as defined under the PHSA.
• Animal healthcare products are articles intended for the diagnosis, cure, mitigation, treatment or prevention of disease in animals; articles (other than food) intended to affect the structure or function of an animal's body; and components of such products. The category covers veterinary pharmaceuticals and USDA-CVB-regulated biologics (vaccines, bacterins and diagnostic products), but excludes devices and combination products for animals.

Eligible jurisdictions

Products of the following jurisdictions are eligible for the clause 3(d) tariff adjustment: Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, India, Indonesia, Japan, Jordan, Malaysia, North Macedonia, the Republic of Korea, Switzerland and Liechtenstein, Taiwan, Thailand, the United Kingdom and Vietnam. Commerce has indicated that changes to the list may be published in a future notice.

Requesting approval on the basis of an urgent US health need

If the jurisdiction pathway is unavailable, a company may request Commerce Department approval for a clause 3(d) product, or another specialty product, on the basis that the import meets an urgent US health need. Requests are submitted by email to pharma232@bis.doc.gov, and only one product may be submitted per application. Each request should identify the company and the authorized representative making the submission and should provide the:

• Harmonized Tariff Schedule of the United States (HTSUS) classification (10-digit where possible)
• Advertised name and brand or Investigational New Drug Application number, as applicable, together with the active ingredient or combination of active ingredients
• Clause 3(d) category claimed
• Country of origin and country of export for products imported under each HTSUS classification
• Name and importer-of-record number of each importer
• Name and address of the manufacturer

The request must also explain how the import meets an urgent US health need. Commerce has indicated that the rationale may address the disease the product treats, an assessment of alternative therapies or the absence of them, the number of US patients using the product and whether the product is available in other jurisdictions. Requests should be limited to patented pharmaceutical products and associated ingredients covered by the HTSUS codes listed in Annex I of the Proclamation.

Commerce may request supplemental documentation or clarification, and will consult with the US Trade Representative (USTR) and Department of Health and Human Services (HHS). Determinations are individual, fact-specific and company-specific, and companies will be notified in writing. Relevant information from approved requests will be transmitted to Customs and Border Protection (CBP), which will administer the tariff adjustment at the time of entry summary filing and may request additional documentation to validate entries. Commerce has committed to (1) protecting confidential, trade secret and proprietary information to the fullest extent permitted by law, including under the Trade Secrets Act (18 U.S.C. 1905) and Exemptions 3 and 4 of the Freedom of Information Act (5 U.S.C. 552(b)(3), (4)), and (2) limiting dissemination to those within Commerce, the USTR and other executive branch agencies with a need to know.

Technical corrections to the HTSUS

The notice and its annexes make five corrections to Annex I of Proclamation 11020 and one correction to Annex IV.

Within Annex I, the definition of "generic pharmaceutical articles" in subdivision (c)(iii), with respect to heading 9903.04.67, is modified to include expressly "unpatented animal health products." A new Chapter 99 heading carrying a zero ad valorem rate is added, to be used by filers for pharmaceutical products and associated ingredients imported under HTSUS classifications listed in subpart (c) of US note 40 that are solely intended for clinical trials, research and development (R&D), or other noncommercial applications. The definition of "pharmaceutical articles" in subdivision (c)(i) is narrowed to clarify that it encompasses only finished pharmaceutical products, their active pharmaceutical ingredients (APIs) and the key starting materials (KSMs) of those APIs. Correspondingly, subdivision (i), with respect to heading 9903.04.69, is amended to clarify that the provision captures any pharmaceutical or non-pharmaceutical article imported under an HTSUS classification listed in subpart (c) of US note 40 that is not a finished pharmaceutical product, an API or a KSM. Finally, Annex I is updated to incorporate the HTSUS changes that the Committee for the Statistical Annotation of Tariff Schedules made on 1 July 2026.

The Annex IV correction resolves an inconsistency in which certain classifications appeared in both Annex I and Annex IV. HTSUS 2937.23.50, 3002.13.00, 3002.14.00, 3002.15.00 and 3004.49.00 are removed from Annex IV.

Paperwork Reduction Act treatment

Because the Proclamation requires timely implementation and delay would impede companies' abilities to seek approval before the tariffs take effect, the BIS determined that it could not reasonably follow normal clearance procedures. Submissions are voluntary, and the BIS will separately publish a 60-day notice seeking comments on the collection.

What this means for businesses

The notice removes a significant amount of the uncertainty that has surrounded clause 3(d) since April 2026, but it does not convert the carve-outs into self-executing exemptions. The jurisdiction pathway operates by reference to a published list and therefore turns on a defensible country-of-origin determination. The urgent-health-need pathway, by contrast, requires an affirmative Commerce determination communicated to CBP before the adjustment may be claimed at entry. There is no mechanism for an importer to self-assess eligibility on that basis.

Because the definitions are keyed to specific FD&C Act, PHSA and Code of Federal Regulations (CFR) provisions, assessment must occur at the product and indication level. The orphan category in particular requires that all approved or licensed indications be for rare diseases or conditions, so a single non-orphan indication will disqualify the product. The one-product-per-application requirement means that companies with broad portfolios will need to triage and sequence submissions, rather than file a single consolidated request.

The technical corrections are narrower in scope but may have immediate classification consequences. The narrowed "pharmaceutical articles" definition and the corresponding amendment to 9903.04.69 sharpen the line between finished products, APIs and KSMs on one side and everything else on the other. The new zero-rate heading for clinical trial, R&D and noncommercial imports is a meaningful development for companies moving material for development purposes and warrants a review of current entry filing practice.

Actions to consider

Businesses affected by these developments should, depending on their particular circumstances, consider the following actions:

• Map product portfolios against the clause 3(d) definitions at the indication level, with particular attention to orphan-designated products if non-orphan indications may defeat eligibility.
• Confirm and document country-of-origin and country-of-export determinations for products that may qualify under the eligible jurisdiction pathway.
• Prioritize and prepare urgent US health-need submissions in advance of 29 September 2026, recognizing the one-product-per-application requirement and the need for supporting rationale on therapeutic alternatives and US patient populations.
• Review whether covered goods imported solely for clinical trials, R&D or other noncommercial applications qualify for the new zero-rate Chapter 99 heading, and update broker instructions accordingly.
• Reassess entries involving the five HTSUS classifications removed from Annex IV, and any products classified by reference to the prior "pharmaceutical articles" or 9903.04.69 language.
• Establish recordkeeping to support CBP validation-at-entry summary, including retention of the Commerce approval and the underlying submission.
• Monitor future Federal Register notices for changes to the eligible jurisdiction list, additional Commerce Secretary-designated specialty categories and further HTSUS modifications.

Companies relying on clause 3(d) should anticipate potential CBP scrutiny of origin determinations, product eligibility and supporting records during post-entry review.