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US and UK Seal Zero-Tariffs Pharmaceutical Deal Boosting Drug Spending

US and UK seal zero-tariff deal on pharmaceuticals, boosting drug trade amid Trump's tariff push.

By Tracey Ashlee
The United States and the United Kingdom have unveiled a landmark agreement that slashes tariffs to zero on British pharmaceuticals, medical ingredients, and medical technology exported to the US, per BBC. Under the accord, which forms part of the broader UK–US Economic Prosperity Deal, the Trump administration has committed not to levy import taxes on UK-origin medicines for at least three years. In return, the UK has agreed to significantly increase how much its public health system spends on new and innovative treatments, boosting the net price paid for certain medicines by about 25%. For more than 20 years, there has been no adjustment in the price that the NHS pays for medicines and it seems as if it was high time that there was an increase. US President Donald Trump threatened the UK's pharma industry by saying that he would increase the tariffs by as much as 100% on branded drug imports. The pharmaceutical exports are one of the major exports from the UK to the US. The deal will accelerate access to cutting-edge treatments for patients under the National Health Service (NHS), and also strengthen the UK’s life-sciences industry. This automatically leads to protecting thousands of jobs in the process. The UK's Business and Trade Secretary Peter Kyle stated that the accord "guarantees that UK pharmaceutical exports – worth at least £5bn a year - will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences." While the White House's Kush Desai was also positive about the trade agreement. He said that it was a "historic step towards ensuring that other developed countries finally pay their fair share." Many of the changes come from updates at the National Institute for Health and Care Excellence (NICE), the body that determines which drugs the NHS can offer. The US-UK pharmaceutical deal raises the “value threshold” NICE uses to evaluate whether a treatment is cost-effective. This enables more expensive and advanced therapies to qualify that previously would not have been able to. Another important addition is that he agreement lowers the rebate obligations for pharmaceutical companies under the current medicines-pricing scheme. This means that the pharmaceutical industry pays back less to the NHS when branded medicines exceed a certain sales cap. For the Trump administration, the deal answers concerns that American drug companies aren’t being paid fairly when their medicines are sold at lower prices abroad. Now, the pact ensures that UK buyers pay more for new medicines while still preserving US access to British-made drugs. For the UK, the zero-tariff arrangement is the most favorable the US has offered any country so far. Government officials have described the pact as a “milestone” for patients, public health. It also boosts the UK’s ambitions to become a global hub for medical research and life-sciences investment. According to The Guardian, the UK's Science and Technology secretary, Liz Kendall, also pointed out that the deal was "vital" and would benefit those who needed it the most. She said it would "ensure UK patients get the cutting-edge medicines they need sooner." Critics warn the higher spending could place extra pressure on NHS budgets. But for now, the deal stands as a sweeping re-set in how medicines are traded between the world’s two leading drug markets.

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