Gil Roth, President of PBOA, and Marta Wosińska, Senior Fellow at the Brookings Institution, told CDMO Live Americas that the headline tariff rate matters far less to contract manufacturers than who actually pays it.
A 100% tariff sounds like a powerful reason to move drug manufacturing to the US. For most of the contract manufacturing market, it is not. That was a takeaway from Marta Wosińska, Senior Fellow at the Brookings Institution, in a fireside chat with Gil Roth, President of the Pharma & Biopharma Outsourcing Association (PBOA), at CDMO Live Americas 2026 in October.
Roth opened the session by discussing a Washington agenda he called ‘contradictory’, chasing lower drug prices and domestic manufacturing at once. Wosińska then took the audience inside the Section 232 tariffs at its center.
Inside the Section 232 Economics
Section 232 tariffs on branded drugs start at 100%, Roth explained. Under Commerce Department guidance, an onshoring program cuts that to 20%, and a most favored nation (MFN) pricing agreement takes it to zero. At PBOA’s urging, contracting with a domestic CDMO counts as onshoring.
Wosińska showed why the 100% figure misleads. Products made in Europe, Japan or Korea fall under trade deals capped at 15%. “The vast majority of them are going to be exposed to 15% tariffs,” she said. “Onshoring only brings it down to 20%, and they’re already at 15%.” Full relief requires an MFN agreement.
That leaves the long tail of smaller sponsors little reason to move. A small biotech working with a European CDMO would have to sign a costly MFN agreement and fund a tech transfer. “You might be willing to absorb 15%,” she said.
Movement will come from companies exposed to the full 100%, a group Wosińska traces to four countries. China matters less than many assume: its role centers on early development, and the tariff applies only to marketed products. Using USP’s Medicine Supply Map, she identified India as the largest 100% bucket, with Israel and Singapore also exposed. Teva’s place in the second round of MFN deals fit the pattern, given its Israeli plants.
Generics: The Economics Does Not Work
The President has announced generics tariffs of 100% in 2028 and 200% in 2029. Wosińska said the Truth Social post caught people off guard, “including apparently in the White House,” and she expects news on generics and biosimilars in April.
Generic margins leave no room to absorb it, she warned, and Medicaid inflation rebates and 340B block manufacturers from passing costs on. “You either will have shortages, or you’re going to push manufacturers closer towards China,” she said. CDMOs offer little relief in solid oral dose, where generic makers sell into a spot market and hold no committed volume to justify a contract.
FDA in a Resource-Neutral Era
Roth described an FDA recovering from the 2025 DOGE cuts and entering a “make FDA boring again” phase under its acting commissioner. GDUFA IV will be resource neutral, with no new FTEs, which keeps fees stable but signals five years without growth. The foreign facility differential rises from $15,000 to $25,000, and domestic sites may request surveillance inspections. Roth has heard that new inspectors now train for six weeks at a computer, against roughly 18 months of shadowing before.
Wosińska said the deeper problem is that few veterans remain to train anyone. People accepted lower pay for job security and mission, she said, “and once you take these two pieces away, then why would you bother if you have an alternative?”
Billions Versus Millions
Roth set in-house pledges, such as $70 billion each from Merck and Pfizer, against CDMO commitments measured in hundreds of millions. He calls CDMO dollars a force multiplier, serving many sponsors. Wosińska agreed: “Without CDMO space, we wouldn’t have small companies being able to sustain themselves.”
The pair split on the CLEAR LABELS Act, which would let patients look up where a drug’s API and dosage form were made. Wosińska doubts it will move the market, since a patient at the pharmacy “will have one decision, which is to pick it up or not,” but rejects the claim that disclosure harms industry, noting Europe already requires it. Roth worries patients would call the CDMO instead of the sponsor.
What It Means for Sponsors
Sponsors making product in trade-deal countries face 15%, and a tech transfer to the US buys them nothing without an MFN agreement. Those with marketed product from India, Israel, or Singapore face real pressure, and a domestic CDMO contract offers a route to relief. As Roth put it, the gap between what gets announced and what gets implemented is the space to watch.
