The United Kingdom and the United States have reached an agreement to maintain zero tariffs on UK pharmaceutical exports to America.
Under the deal, the UK will increase NHS spending on medicines in exchange for a three-year guarantee that US import taxes on UK-made pharmaceuticals will remain at zero.
The agreement follows US President Donald Trump’s earlier threat to impose tariffs of up to 100% on branded drug imports.
Pharmaceuticals are among the UK’s largest exports to the US, which remains the key market for major UK drugmakers including GSK and AstraZeneca.
Earlier this year, President Trump announced substantial increases to import taxes, arguing that the move would create jobs and boost American manufacturing. The White House initially exempted pharmaceuticals from these tariffs and later reached a deal with the UK to reduce levies on most goods to 10%, though the status of pharmaceuticals remained uncertain.
Trump has also argued that US consumers subsidise medicines for other developed nations by paying premium prices, calling for other countries to pay more. White House spokesman Kush Desai described the agreement as “a historic step towards ensuring that other developed countries finally pay their fair share.”
As part of the deal, the UK will raise the price threshold for new treatments deemed too expensive by 25% and will aim to increase NHS spending on medicines from 0.3% of GDP to 0.6% over the next decade. The repayment amount drug companies must return to the NHS to prevent overspending will be capped at 15%, down from more than 20% last year.
In return, UK pharmaceutical exports will be shielded from tariff increases for the next three years.
Business and Trade Secretary Peter Kyle said: “The deal 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.”
Several large pharmaceutical investments in the UK have been paused or cancelled over the past 18 months, while GSK and AstraZeneca have announced multi-billion-dollar investments in the US. In mid-September, GSK pledged $30bn (£22bn) in research and manufacturing in the US over the next five years.
William Bain, head of trade policy at the British Chambers of Commerce, welcomed the agreement: “This deal is a real win. It will promote exports, boost investment, and enhance UK competitiveness as a production and innovation base for world-leading medicines and treatments.”
The UK government highlighted that it is “the only country in the world to have secured a zero percent tariff rate for pharmaceutical shipments.” European officials had previously expected their exports to be protected under terms capping tariffs at 15%.
US Health Secretary Robert Kennedy Jr said: “Americans should not pay the world’s highest drug costs for medicines they helped fund. This agreement with the United Kingdom strengthens the global environment for innovative medicines and brings long-overdue balance to U.S.–U.K. pharmaceutical trade.”
