US-UK drug deal: The United States and the United Kingdom have reached a new trade agreement that removes US tariffs on British-made pharmaceutical products and medical technology, while requiring Britain to increase what it pays for innovative American medicines.
The deal will lift Section 232 tariffs, and any future Section 301 tariffs, on UK-manufactured drugs, active ingredients and medical devices. In return, Britain has agreed to raise the net price it pays for new US medicines by 25%.
Also Read | AstraZeneca to offer Medicaid its lowest international prices; Trump touts ‘tough’ talks
US Trade Representative Jamieson Greer called the arrangement a significant step for both countries. “This negotiated outcome on pricing for innovative pharmaceuticals will help drive investment and innovation on both sides,” he said.
Major change to the UK’s drug assessment system
A key component of the agreement involves adjustments to the UK’s value appraisal framework at NICE, the agency that determines whether medicines are cost-effective for use in the National Health Service (NHS).
NICE’s cost-effectiveness threshold, measured through its “quality-adjusted life year” (QALY) standard, will rise from £30,000 to £35,000. The UK government said the updated threshold better reflects the commercial realities faced by drugmakers.
The new rules will apply to all future medicines, not just US products, but will not affect pricing for treatments already available on the NHS. NICE has previously declined several high-profile drugs, including Eli Lilly’s Alzheimer’s therapy and AstraZeneca’s Enhertu for breast cancer, due to high projected costs.
The deal follows years of pressure from US officials, including President Donald Trump, who has urged European governments to pay more for American-made drugs. Pharmaceutical companies have long criticised the UK’s strict pricing environment, with some firms delaying or scaling back investments in the country.
The Association of the British Pharmaceutical Industry (ABPI) said the changes should help patients access new treatments more quickly and encourage companies to invest in the UK. GSK and AstraZeneca shares remained stable following the announcement, reflecting the UK’s relatively small share in global pharma revenues.
The British Chambers of Commerce praised the deal, noting that pharmaceuticals account for around 20% of UK exports to the US by value, and that securing tariff exemptions gives Britain a significant advantage.