Zero-tariff pharmaceutical deal - UK and US agree after months of tensions
Britain and the United States announced they had signed an agreement eliminating tariffs on UK pharmaceutical products shipped to the US. In exchange for this concession from Washington, the UK will reduce the rebates that drug manufacturers pay to the National Health Service (NHS).
Under the current scheme, pharmaceutical companies return a portion of revenue to the NHS from sales of branded drugs, a structure designed to prevent overspending.
According to a statement from the United States Trade Representative (USTR), the UK will now reduce the rebate to a maximum of 15% in 2026, from the current level of around 23%. The UK will increase the net price it pays for new medicines by 25%.
The move comes after President Donald Trump threatened tariffs of up to 100% on branded or patented drugs shipped to the US unless companies would consider building a US factory or manufacturing facility.
The prospect, announced in September, has worried major manufacturers. Pharmaceuticals remain one of the UK's strongest export sectors, including drugmakers AstraZeneca and GSK.
The US has long argued that American patients pay much more for new drugs than people in the UK, largely because of the NHS's strict pricing system.
The UK government said the "historic deal" with the US ensures Britain's "access and supply of medicines for tens of thousands of NHS patients", adding that "innovative new treatments" would reach "the frontline faster".
Earlier this year, several major pharmaceutical firms announced significant new investments in the United States while delaying or revising their projects in the United Kingdom, citing what they described as Britain's challenging regulatory and commercial environment.
According to a recent report from the Association of the British Pharmaceutical Industry (ABPI), the UK's approach to drug pricing and reimbursement has caused a decline in foreign investment in the British pharmaceutical industry.
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