The United States and the United Kingdom have reached a new agreement that links drug pricing in Britain with a promise of continued tariff-free access for UK pharmaceutical exports entering the American market. The arrangement, announced Monday, marks an effort by both governments to stabilise a sector that has been strained by rising costs, regulatory pressures and concerns about declining investment in the UK.
Under the deal, the UK will raise the net price it pays for new American medicines by 25%. In exchange, pharmaceuticals and medical technology produced in Britain will remain free of U.S. import duties, including potential future actions under Section 232 and Section 301 trade laws. This commitment applies for at least three years and shields one of Britain’s largest export categories from the threat of steep tariff increases repeatedly floated by Washington in recent months.
A central element of the agreement involves changes to the framework used by NICE, the UK body that evaluates whether new treatments offer reasonable value for the National Health Service (NHS). The threshold used to judge the worth of an extra healthy year of life will rise from £30,000 to £35,000, making it easier for higher-priced medicines to gain approval. The UK government says this update reflects the evolving commercial climate in which global pharmaceutical firms operate.
NICE currently approves around 90% of the roughly 70 medicines it assesses each year. Analysts expect the revised threshold to bring a handful of additional therapies into use annually. Critics, however, warn that higher drug spending could further strain an NHS budget already under pressure. The Nuffield Trust estimates the agreement could add as much as £3 billion in annual costs, money some argue would be better devoted to primary care or clearing treatment backlogs.
Still, industry groups welcomed the outcome. The Association of the British Pharmaceutical Industry said the changes would improve patient access to new treatments and help attract investment. Several major companies have recently paused or cancelled UK expansion plans, citing a challenging business climate and an unpredictable pricing system. The new deal also caps the proportion of sales that drug companies must return to the NHS at 15% starting in 2026, reducing the burden of the current rebate scheme.
On the American side, officials emphasised that the arrangement advances long-standing goals to bring foreign drug prices closer to U.S. levels. President Donald Trump has repeatedly argued that American consumers pay too much relative to patients in other wealthy countries. The White House called the agreement a step toward fairer cost-sharing and a more balanced trading environment.
The pact also fits into a broader U.S. push to lock in trade rules ahead of a Supreme Court ruling that could affect the legality of earlier tariff actions. By finalising detailed bilateral arrangements now, Washington aims to secure fallback options should elements of its tariff strategy be overturned.
Business organisations in both countries hailed the agreement as a boost for investment and a reassurance for companies operating in an unsettled global trade landscape. Bristol Myers Squibb, for example, said it now expects to invest more than $500 million in the UK over the next five years.
As pressure on healthcare systems and global supply chains continues, the deal signals an attempt by both governments to stabilise a vital sector while addressing long-running disputes over pricing and market access.
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