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The UK and the US have reached an agreement to maintain zero tariffs on UK pharmaceutical shipments into America. This deal requires the UK to pay more for medicines through the NHS—the first such increase in over 20 years—in exchange for a three-year guarantee that US import taxes on UK-made pharmaceuticals will remain at zero.
The deal comes after US President Donald Trump threatened to raise tariffs to as high as 100% on branded drug imports, one of the UK's biggest exports to the US.
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."
The UK exported £11.1bn worth of medicines to the US in the 12 months to the end of September, making up 17.4% of all goods exports in that period, according to the Department for Business and Trade.
Pharmaceuticals were not included in the wave of tariffs US President Donald Trump had announced earlier this year. But he has repeatedly threatened to raise tariffs on medicines, citing concerns about America's reliance on medicines made overseas and a desire to increase manufacturing in the US.
He has also argued that US consumers effectively subsidise medicines for other developed countries by paying premium prices for those drugs and pushed for other countries to pay more.
Under the terms set out on Monday, the UK will increase the price threshold, at which it deems new treatments to be too expensive, by 25%.
The UK will also increase the overall amount the NHS spends on medicines, with a target to increase that spending from 0.3% of GDP to 0.6% of GDP over the next 10 years.
The amount drug companies must pay back to the NHS to ensure the health system does not overspend its allocated budget will be capped at 15% - last year, drug companies had to pay back more than 20%.
In exchange, UK medicine exports will be protected from tariff increases for the next three years.
