Navigating the New U.S. Section 232 Tariffs: Patented APIs and Intermediates
The recent U.S. Section 232 tariff measures are creating new uncertainty for pharmaceutical companies importing patented APIs and intermediates into the United States. But for clinical-stage biotech companies, one critical detail stands out:
The prototype exemption remains unaffected.
Under the preserved HTSUS 9817.85.01 prototype exemption, materials used exclusively for development, testing, product evaluation, or quality-control purposes may continue to qualify for tariff exemption when properly documented and classified.
For companies developing early-stage therapies, this creates an important strategic opportunity and highlights the growing value of working with a Canadian CDMO such as Corealis Pharma.
Understanding Section 232
On April 2, 2026, the U.S. administration issued a Proclamation under Section 232 of the Trade Expansion Act of 1962 introducing new tariffs on patented pharmaceuticals, APIs, and key intermediates imported into the United States. Under the new framework a 100% baseline ad valorem tariff may apply to certain patented pharmaceutical products, APIs and intermediates starting 31 July 2026, with additional applicability dates extending into September 2026 for companies not identified in Annex III.
Why the Prototype Exemption Matters
Importantly for clinical-stage programs, the Proclamation preserves the HTSUS prototype exemption for:
“Prototypes to be used exclusively for development, testing, product evaluation, or quality-control purposes.”
This exemption is particularly relevant to clinical-stage biotech and pharma companies and to CDMOs supporting formulation development, GMP clinical manufacturing, and clinical supply activities.
The Strategic Advantage of Drug Product Development in Canada
As companies reassess supply chain strategy, Canadian-based drug product formulation development and clinical batch manufacturing offer a meaningful advantage.
By partnering with Corealis Pharma:
- APIs and intermediates may be imported into Canada rather than directly into the United States without requiring an IND number, which is otherwise mandated under FDA regulations (21 CFR 312.110(a)); this creates a meaningful timeline advantage when working with Corealis, as Health Canada does not impose this requirement.
- Formulation development and GMP clinical manufacturing can be performed in Canada, with the resulting clinical‑stage drug product subsequently supplied to the United States for clinical trials under the preserved prototype exemption framework.
At Corealis Pharma, supporting early-stage programs within a GMP and documentation-driven environment has always been central to how we operate. Our integrated development and clinical manufacturing model is designed to support the evolving regulatory, technical, and logistical needs of clinical-stage biotech companies.
Contact Corealis Pharma to inquire further.
Contact Corealis
Corealis’ experts are ready to answer any queries about the company’s oral solid dose offering, including its development and manufacturing capabilities.
