Assume that a US buyer and a Swiss manufacturer agree on a fixed price, a delivery term and a tax clause. Months later, a customs entry attracts a pharmaceutical duty. The buyer forwards the assessment; the seller points to the purchase order. Both may have a plausible contractual position while the importer still owes payment to US Customs. A commercial discussion framed as passing through a tax can become a dispute over the agreed price, the product’s origin and the law governing the sale.
1. Which pharmaceutical duty reaches the shipment?
Proclamation 11020 of 2 April 2026 implemented pharmaceutical duties under section 232 of the Trade Expansion Act of 1962. The duties apply to consumption entries or warehouse withdrawals from 31 July 2026 for the companies identified in Annex III to Proclamation 11020 and from 29 September 2026 for other companies. An agreement signed before those dates does not, merely because of its age, remove the shipment from the measure. The customs event specified in the proclamation differs from the contract’s signature, invoice or dispatch date.1Proclamation 11020 of April 2, 2026, Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients Into the United States, 91 Fed. Reg. 18183–18200 (April 9, 2026), clauses (3)–(8) and (11).
For covered patented pharmaceutical articles that are products of Switzerland or Liechtenstein, the proclamation sets a 15% rate unless a lower proclamation rate applies. The interaction with the ordinary tariff matters. Generally, the ordinary Column 1 duty and the additional duty together equal the applicable proclamation rate; if the ordinary duty exceeds that rate, only the ordinary duty applies. Describing the Swiss treatment as another 15 percentage points added to every invoice overstates it. Describing 15% as a ceiling on every possible US duty or charge overstates it in another direction: the annex preserves antidumping, countervailing and other applicable duties and charges.1Proclamation 11020 (n 1), clauses (3)–(8) and (11).
The November 2025 political arrangement and the enacted customs measure also occupy different positions. The joint statement expresses an intention to keep ordinary most-favored-nation duty and the additional national-security duty within 15% for covered originating pharmaceutical goods. Its final paragraph expressly denies legally binding international rights or obligations. A contract referring to the announcement, a promised ceiling or the resulting US tariff schedule may therefore identify different events. The April proclamation supplies the domestic pharmaceutical measure; the announcement alone cannot establish the precise charge on a later shipment.2The White House, 'Joint Statement on a Framework for a United States – Switzerland – Liechtenstein Agreement on Fair, Balanced, and Reciprocal Trade' (November 14, 2025), paragraph 2 and final paragraph.
Product identity can remove the assumed cost before the allocation dispute starts. The proclamation’s patented-article definition refers to a valid, unexpired US patent and the relevant Food and Drug Administration listings, together with ingredients for those articles. Generic pharmaceuticals and associated ingredients were excluded from this levy. Certain specialty categories receive zero additional-duty treatment under stated conditions. The 23 September 2026 implementation notice includes Switzerland and Liechtenstein among eligible jurisdictions and defines the categories, including the requirement concerning all approved indications for orphan products. It also creates separate zero-additional-duty treatment for articles solely intended for clinical trials, research and development or other noncommercial applications. A supplier’s description of a product as innovative, orphan or research material does not establish every legal condition.3Bureau of Industry and Security, Guidance and Procedures for Implementing Tariff Adjustments for Specialty Pharmaceuticals and Associated Pharmaceutical Ingredients and Technical Corrections to the Harmonized Tariff Schedule of the United States for Duties Imposed Under Proclamation 11020, 91 Fed. Reg. 60360–60366 (September 23, 2026), parts II–V and Annexes I–II.
Company-specific treatment complicates the meaning of a tariff increase still further. Qualifying onshoring and US health-department pricing arrangements can support zero additional-duty treatment until 20 January 2029, when the relevant tariff heading terminates at 12:01 a.m. eastern time. The May 2026 application notice makes preferential treatment product- and company-specific and limits its extension to later acquisitions or licensed products without approval. A group announcement does not establish that a particular distributor’s purchase benefits from the same terms. If relief disappears because a manufacturer fails to meet its commitments, the resulting customs cost and responsibility for causing that cost may point to different counterparties.4Bureau of Industry and Security, Procedures To Apply for Company-Specific Onshoring Agreements To Obtain Tariff Adjustments for Pharmaceuticals and Pharmaceutical Ingredients Under Proclamation 11020, 91 Fed. Reg. 26989–26992 (May 13, 2026), part II, item 8 and Review and Approval Process.
The proclamation also permits specified rate increases where companies or jurisdictions fail to fulfill commitments, with a Federal Register notice. A contract allocating changes imposed by government may still leave disagreement over a cost arising from a manufacturer’s own failure to maintain preferential treatment. The same customs assessment can therefore generate a reimbursement demand and a counterclaim that the demand would never have arisen had the manufacturer met its commitments.
For a pricing committee, the relevant dispute is consequently more precise than whether the United States imposed a pharmaceutical tariff. It concerns which product, company, origin and entry falls within which provision, and whether the contract makes the other party responsible for that particular charge. The distinction also separates tariff relief linked to pricing commitments from the wider issues of Swiss drug pricing under US most-favored-nation pressure. A commitment relevant to one regime does not supply the missing contractual language in the other.
The importer’s duty to pay Customs, the agreement’s allocation of import costs and any right to change the product price are separate questions, even when all three concern the same shipment.
2. Does the delivery term also settle the price?
The importer of record’s statutory deposit obligation under 19 U.S.C. § 1505 exists independently of a reimbursement claim against the seller. A contract can make another party bear a cost economically without changing the person from whom Customs requires the deposit. Where the importer pays and invoices the supplier, the customs obligation and the invoice dispute may proceed on different timetables. Establishing that the import declaration was correct does not establish that the supplier promised to reimburse it.519 U.S.C. § 1505(a)–(b), Payment of duties and fees.
Under unmodified Incoterms® 2020 rules, DDP puts import-clearance and duty costs on the seller. DAP, FCA and EXW put the import burden on the buyer. These familiar terms provide a meaningful starting allocation when incorporated into the agreement. Their apparent brevity can nevertheless conceal a separate price bargain. A DDP sale with an express right to recover newly imposed duties is different from DDP at an unqualified fixed delivered price. A DAP buyer’s responsibility for import formalities does not answer whether another provision grants a compensating price reduction.6International Chamber of Commerce, Incoterms® 2020 (ICC Publication 723E, 2019), EXW, FCA, DAP and DDP, rules A7/B7 and A9/B9.
The International Chamber of Commerce distinguishes cost and delivery allocation from matters the rules do not determine, including payment of the price, transfer of title, the imposition of tariffs, force majeure and hardship. Delivery risk in this setting concerns loss of or damage to the goods. It cannot simply be substituted for every financial risk associated with the transaction. A product delivered to a carrier before the tariff’s effective date may enter US consumption afterward; the delivery rule and the customs rule can each operate as written while pointing to different dates.6ICC, Incoterms® 2020 (n 6), EXW, FCA, DAP and DDP, rules A7/B7 and A9/B9.
Swiss contract interpretation under Art. 18(1) OR looks to the parties’ actual common intention rather than an inaccurate label. Art. 19 OR permits the content of an agreement to be determined within the limits of the law. A heading reading taxes and duties does not therefore resolve whether a charge belongs to the supplier’s agreed cost, the buyer’s separate obligation or a price-adjustment mechanism. The words imported goods, delivery, new taxes and changes in law may carry different meanings across a master agreement, product schedule and individual order.7Bundesgesetz betreffend die Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil: Obligationenrecht, OR) vom 30. März 1911 (SR 220), Stand am 1. Oktober 2026, Art. 18(1) OR, Art. 19 OR, Art. 97(1) OR, Art. 119 OR and Art. 373 OR.
A tariff pass-through also leaves the measure of the claimed amount open. A provision based on duties actually paid may operate differently from a surcharge calculated on a stated percentage of the sales price. One may contemplate reimbursement after an assessment; another may change the contractual price before import. If preferential treatment reduces the assessment, or a refund later follows, a clause written only for increases may leave the economic benefit unallocated. These are questions about what the parties promised, rather than reasons to assume that either a tax label or a customs receipt answers them.
The order mechanism can change the dispute without changing the delivery term. A revised price proposed for future orders does not necessarily amend an order already accepted at a fixed price. A master agreement may distinguish forecasts from binding purchases or make one document prevail over inconsistent order terms. The meaning of an adjustment notice then depends on which commitment it purports to alter, rather than the date on which the notice happens to arrive.
The distributor encounters the same problem from the other side of the margin. Its obligation to pay the manufacturer and its ability to raise the resale price arise under different relationships. A duty may erode the return on a distribution arrangement without changing the agreed purchase price. Conversely, a supplier’s contractual right to increase that price may matter even where the distributor is the importer and pays Customs directly. A renegotiation undertaking, a unilateral adjustment right and a right to terminate are materially different promises. The existence of one does not, without the relevant contractual language, establish the others.
3. Can Swiss law or the CISG reopen the bargain?
A Swiss governing-law clause does not make domestic OR sales rules the inevitable starting point. The CISG applies to qualifying international goods sales between parties in contracting states, including Switzerland and the United States, subject to its scope and any effective exclusion. Art. 3 of the Convention treats manufactured-goods supply as a sale unless the customer supplies a substantial part of the necessary materials, while excluding contracts in which services form the preponderant obligation. A manufacturing agreement, a distribution framework and an order placed under it need not receive the same characterization.8United Nations Convention on Contracts for the International Sale of Goods, Vienna, April 11, 1980, 1489 UNTS 3 (CISG; SR 0.221.211.1), Art. 1, Art. 3–4, Art. 6–9 and Art. 79.
Art. 79 of the Convention requires proof of an impediment beyond the party’s control that it could not reasonably have been expected to take into account at conclusion or avoid or overcome, including its consequences. It limits the duration of exemption and requires notice. Art. 79(5) of the Convention preserves rights other than a damages claim. The provision does not expressly confer a right to replace the agreed price with a profitable one. Whether exceptional economic hardship meets its impediment standard cannot be answered merely by renaming the tariff force majeure; nor can a domestic hardship rule simply be inserted without the Convention’s international interpretation and gap rules.
Domestic Swiss law does recognize exceptional judicial adjustment through clausula rebus sic stantibus. The doctrine is associated with good faith and the prohibition of abuse under Art. 2 ZGB. In BGE 127 III 300, the Federal Supreme Court required an unforeseeable and unavoidable change, a severe imbalance in the circumstances considered there, and absence of unconditional performance. It also distinguished the general foreseeability of legal change from the foreseeability of its particular nature, extent and contractual consequences. A tariff’s political discussion before signature can matter without proving that every later measure was already an assumed risk.9Schweizerisches Zivilgesetzbuch (ZGB) vom 10. Dezember 1907 (SR 210), Stand am 1. Juli 2026, Art. 2 ZGB; BGE 127 III 300, 304–307 E. 5b–6a.
The same court confirmed in BGE 135 III 1 that judicial adjustment against a party’s wishes is possible under restrictive conditions. Its discussion of agreed adjustment rights also requires sufficient definition of the triggering event and scope of the adjustment. These decisions do not create a pharmaceutical percentage threshold. They place the actual allocation and the severity of the disruption in issue. An undertaking to absorb import duties and a contract silent about them may leave different room for judicial intervention; neither decision authorizes automatic repricing by the party claiming hardship.10BGE 135 III 1, 9–11 E. 2.4–2.6.
The statutory routes are narrower than a general appeal to fairness. Art. 119 OR concerns performance that has become impossible through circumstances for which the debtor is not responsible. Increased expense alone does not establish that condition. Art. 373(2) OR permits a court to increase the price or dissolve a contract for work where extraordinary circumstances, unforeseeable or excluded by the parties’ shared assumptions, prevent or excessively impede completion. That provision cannot be transferred wholesale to a distribution agreement merely because both businesses have lost margin. Its relevance to a manufacturing arrangement depends on the contract’s characterization.7OR (n 7), Art. 18(1), Art. 19, Art. 97(1), Art. 119 and Art. 373.
A claim for judicial adjustment also differs from an agreed right to stop performance. The absence of unconditional performance in the case-law formulation is not itself a general license to suspend deliveries or refuse payment. Under Art. 97(1) OR, nonperformance or defective performance can attract damages unless the debtor proves absence of fault. A party relying on relief that has not been established can consequently place its continuing performance obligations in dispute alongside the price it is trying to change.
US counsel may recognize the UCC concept of commercial impracticability. New York’s Uniform Commercial Code § 2-615 addresses a seller’s delay or nondelivery where the stated conditions are met, subject to any greater obligation assumed, allocation requirements and notice. Its treatment of governmental regulation does not supply a general right to increase the price. A negotiated force-majeure or change-in-law clause may separately define an event and its consequences. Event coverage, causation, notice and the promised remedy remain distinct questions under whichever law governs.11N.Y. Uniform Commercial Code Law § 2-615(a)–(c), Excuse by Failure of Presupposed Conditions.
4. Why can origin and value change the dispute?
Even a clear promise to bear the tariff leaves a second dispute: the amount lawfully assessed. Transaction value under 19 U.S.C. § 1401a generally starts with the price actually paid or payable for goods sold for export to the United States, with specified additions. Assists, certain condition-of-sale royalties, selling commissions, packing and resale proceeds can matter. Related-party pricing has its own acceptability conditions. The manufacturer’s invoice, a licensing payment and the distributor’s transfer price cannot be treated as interchangeable values simply because they belong to the same product chain.1219 U.S.C. § 1401a(a)–(b), Value.
The distinction can feed back into the contract claim. Identified customs duties are excluded from transaction value under the statutory conditions, whereas a later rebate reducing the price is disregarded under 19 U.S.C. § 1401a(b)(4)(B). A commercial credit settling a tariff dispute therefore does not necessarily change the value used for the original importation. Whether the demanded reimbursement represents a duty, a revised product price or another payment can matter to both parties’ accounts without their preferred invoice description settling the customs treatment.1219 U.S.C. § 1401a (n 12), subsections (a)–(b) (value).
The first-sale concept is similarly dependent on the underlying transaction. In its 2026 ruling HQ H349649, US Customs and Border Protection required evidence of a bona fide arm’s-length sale for export to the United States and a complete transaction record before accepting an earlier manufacturer-to-middleman price. The ruling concerns propeller assemblies, rather than drugs. It illustrates why the existence of an intermediary invoice does not by itself establish an acceptable earlier sale. Title, risk, payment and the intermediary’s actual role can become evidentiary issues distinct from the parties’ preferred commercial description.13U.S. Customs and Border Protection, HQ H349649 (May 11, 2026), 4–6, first-sale appraisement of shaft assembly propellers.
Origin may be equally distant from the country named on the shipping document. In ruling N350938, Customs examined a biologic whose active substance was made in South Korea, formulated, filled and lyophilized in Portugal, then sent to the United States for labeling and packaging. It found no substantial transformation in Portugal and retained South Korean origin. In ruling N361531, Customs reached a different conclusion for a combination medicine: combining two active substances in India, with additional medicinal benefits compared with taking each alone, substantially transformed the inputs. Neither ruling makes the final packaging site or the active-substance site an invariable answer.14U.S. Customs and Border Protection, NY N350938 (August 1, 2025), 1–2; NY N361531 (May 21, 2026), 1–2, pharmaceutical country-of-origin rulings.
Both holdings are confined to their stated facts. They demonstrate the weakness of treating a Swiss finishing operation as proof of Swiss origin or assuming that origin follows every quality-release decision. The customs question concerns the actual manufacturing transformation. A contractual origin warranty may use another definition, or may require a representation about the same legal test without allocating the consequences of an adverse ruling. A supplier can promise an origin that Customs later rejects; the assessment and the resulting breach claim are different legal events.
The proclamation places Switzerland, EU member states and South Korea within the same stated country tier, subject to lower applicable treatment. Moving a finishing step between those locations does not, merely by changing the shipping address, establish a reduction in the applicable rate. Different origin findings may instead affect the availability of a product-specific exemption or interact with another source of the inputs. The commercial significance requires the actual product and relief conditions, rather than an assumption that every border separates a high-tariff site from a low-tariff one.
The commercial consequence extends beyond the cost of one entry. If the origin or value premise behind a long-term price changes, the supplier’s pass-through demand, the distributor’s margin and the customer’s willingness to accept a revised price may diverge. A tariff does not itself resolve the separate patent, authorization or contractual questions surrounding parallel imports in Switzerland. Nor does the location relevant to customs answer the proposed European manufacturing conditions discussed in the analysis of the EU Biotech Act’s proposed certificate extension. Manufacturing location is a fact each regime evaluates for its own purpose.
5. Strategic Considerations for US and Swiss Pharma Counterparties
The strongest disagreement may concern a premise the parties never recorded. Was a reference to Swiss supply intended as a manufacturing description, an origin warranty or a promise of a particular tariff treatment? Does the reimbursement obligation follow the assessed duty, the duty lawfully payable after available relief, or a fixed surcharge agreed independently of either? A company-specific zero rate makes those distinctions concrete: responsibility for securing or preserving relief may sit with a different entity from the importer or contractual seller.
A price-adjustment dispute also tests the relationship between performance and negotiations. Does the contract make discussions a condition of continuing supply, or require performance while an adjustment is contested? What happens to orders already accepted if negotiations fail? A party invoking hardship must establish more than the undesirability of its bargain, while a counterparty insisting on the original price must still confront the actual risk allocation and the governing legal conditions. The fact that both parties expect a commercial solution does not define the legal position if that expectation fails.
For a distributor, the unresolved cost can become a termination issue before it becomes a final customs assessment. A right to leave the agreement, responsibility for existing inventory and the consequences for ongoing supply need not move together. The tariff measure supplies the public charge; it does not supply the parties’ missing bargain about its economic consequences. Which party controls the origin evidence, the relief conditions and the price adjustment, and which party remains bound to perform when those answers conflict?