Britain has finalized a pharmaceutical trade agreement with the United States, granting UK-made medicines tariff-free access to the U.S. market in exchange for agreeing to higher prices on new medicines. This deal, part of the broader U.S.-UK trade agreement signed last year, ensures that pharmaceuticals exported from Britain will face zero tariffs for at least three years. According to the British government, this arrangement makes the UK the only country with guaranteed tariff-free access for medicines to the U.S.
British Business and Trade Secretary Peter Kyle said on Thursday that the agreement would bolster the UK’s globally leading pharmaceutical sector while safeguarding high-skilled jobs, highlighting the strength of the U.S.-UK economic partnership.
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Government data shows that pharmaceuticals make up roughly one-fifth of British goods exports to the United States by value.
Announcing the deal, U.S. Trade Representative Jamieson Greer emphasized that President Donald Trump aims to ensure trading partners contribute their “fair share” for innovative medicines, preventing U.S. patients from shouldering a disproportionate portion of research and development costs.
Later on Thursday, the Trump administration announced that it would impose tariffs of up to 100% on branded pharmaceuticals imported into the United States unless manufacturers either agree to government-negotiated drug pricing arrangements or commit to producing their products domestically.
PRICING CHANGES
The British government’s published text of the agreement indicates that the deal will necessitate changes to NICE’s appraisal framework, the UK authority that evaluates the cost-effectiveness of National Health Service (NHS) medicines, including raising the cost-effectiveness thresholds for new drugs.
The UK has also committed to increasing medicines spending from 0.3% of GDP to 0.35% by 2028 and further to 0.6% by 2035.
Under the terms of the agreement, the NHS will see a 25% increase in the net price paid for new medicines starting April 2026, with this adjustment applying specifically to drugs launched after the deal comes into effect.
The text also revealed that the tariff exemption is conditional on major UK pharmaceutical companies signing and adhering to separate U.S. government pricing and tariff agreements.
The UK has stated that the deal protects medical technology exports from extra tariffs and provides assurances that it would benefit from safeguards under a proposed U.S. “most favoured nation” drug pricing policy, which aims to align U.S. medicine prices more closely with those in other developed countries.
The pharmaceutical provisions were negotiated independently from the broader U.S.-UK trade agreement signed by former President Trump and Prime Minister Keir Starmer in June 2025, with both sides announcing the outline terms in December.
The UK highlighted that the deal would foster closer collaboration between its Medicines and Healthcare products Regulatory Agency (MHRA) and the U.S. Food and Drug Administration (FDA). This cooperation includes efforts to align medical device regulations, aiming to accelerate patient access to new healthcare technologies.
US PRICING AND TARIFF POLICY
In December, the UK and the U.S. announced that the agreement would guarantee zero tariffs on British pharmaceutical products and medical technologies, in exchange for increased UK spending on medicines and revisions to how new drugs are evaluated.
As part of the deal, by raising the net price it pays for new medicines, the UK secures exemption for UK-made pharmaceuticals, drug ingredients, and medical technologies from U.S. Section 232 sectoral tariffs, as well as from any future Section 301 country-specific tariffs, through January 2029.
UK-based pharmaceutical companies AstraZeneca and GSK each signed separate “most favoured nation” pricing agreements with the Trump administration last year. These deals included three years of protection from potential U.S. pharmaceutical tariffs, highlighting how Washington has used tariff threats as a negotiation tool within the sector.
