By Sam Tabahriti, Maggie Fick and Bhanvi Satija
LONDON, April 2 (Reuters) – Britain has finalised a U.S.-UK pharmaceutical trade deal, setting out tariff-free access for UK-made medicines to the U.S. in return for paying higher prices for new medicines.
The agreement, reached as part of a wider U.S.-UK trade accord signed last year, commits Washington to a zero tariff on pharmaceuticals exported from Britain for at least three years. The British government has said the deal would make Britain the only country with tariff-free access for medicines to the U.S. market.
British Business and Trade Secretary Peter Kyle said in a statement on Thursday that the partnership would support Britain’s world-leading pharmaceutical sector while protecting high-skilled jobs, adding that it demonstrates the strength of the U.S.-British economic relationship.
Pharmaceuticals account for about a fifth of British goods exports to the U.S. by value, according to government data.
Announcing the arrangement, U.S. Trade Representative Jamieson Greer said President Donald Trump is seeking to ensure that trading partners pay their “fair share” for innovative medicines so that U.S. patients are not disproportionately bearing research and development costs.
The Trump administration said later on Thursday it will impose tariffs of up to 100% on branded pharmaceuticals imported into the United States unless manufacturers agree to government drug pricing deals or commit to making their products domestically.
PRICING CHANGES
The published text of the arrangement by the British government showed the deal will require changes to the appraisal framework at NICE, the UK body that assesses the cost‑effectiveness of National Health Service medicines, including higher cost‑effectiveness thresholds for new drugs.
Under the deal, Britain also pledged to increase medicines spending from 0.3% of GDP to 0.35% by 2028 and 0.6% by 2035, the statement said.
Britain will raise the net price paid by the NHS for new medicines by 25% from April 2026, with the increase applying to drugs launched after the agreement takes effect, according to the terms of the agreement.
It also showed that it makes the tariff exemption conditional on major UK pharmaceutical companies entering into and complying with separate U.S. government pricing and tariff agreements.
Britain has also said the deal shields medical technology exports from additional tariffs and includes assurances it would receive mitigations under a proposed U.S. “most favoured nation” drug pricing policy, which seeks to bring U.S. medicine prices closer to those in other developed countries.
The pharmaceuticals provisions were negotiated separately from the wider U.S.-British trade deal signed by Trump and Prime Minister Keir Starmer in June 2025, with the two sides unveiling the outline terms in December.
In a separate statement on Thursday, Britain said the deal would see closer cooperation between its Medicines and Healthcare products Regulatory Agency and the U.S. Food and Drug Administration, including work towards aligning medical device regulation to help speed patient access to new technologies.
US PRICING AND TARIFF POLICY
Britain and the U.S. said in December that the agreement would secure zero tariffs on British pharmaceutical products and medical technology in return for higher UK spending on medicines and changes to how new drugs are valued.
In return for Britain raising the net price it pays for new medicines, UK-made medicines, drug ingredients and medical technology would be exempt from U.S. Section 232 sectoral tariffs and any future Section 301 country-specific tariffs through January 2029.
Britain-headquartered drugmakers AstraZeneca and GSK separately struck “most favoured nation” pricing deals with the Trump administration last year that included three-year protection from potential U.S. pharmaceutical tariffs, underscoring Washington’s broader use of tariff threats in negotiations with the sector.
Following the announcement of the deal, a GSK spokesperson said the company is pleased it has been finalised, adding that it provides certainty on zero tariffs for medicines and improves the British operating environment while rewarding innovation.
The spokesperson said work now needs to happen “at pace” on the detailed action to deliver the improvements.
(Reporting by Sam Tabahriti, Maggie Fick and Bhanvi Satija in London and Ahmed Aboulenein in Washington; Editing by Alex Richardson, Will Dunham and Jane Merriman)
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