Britain has finalised a pharmaceutical trade agreement with the United States that will give UK-made medicines tariff-free access to the American market for at least three years, while committing the NHS to pay more for new drugs and increasing overall medicines spending.
The deal, announced on Thursday as part of a wider US-UK trade accord agreed last year, sets a zero US tariff on pharmaceuticals exported from Britain and, according to the UK government, makes Britain the only country with tariff-free access for medicines to the US market.
In return, Britain has agreed to raise the net price paid by the NHS for new medicines by 25 per cent from April 2026, with the increase applying to drugs launched after the agreement takes effect. The published text also commits the UK to lift medicines spending from 0.3 per cent of gross domestic product to 0.35 per cent by 2028 and to 0.6 per cent by 2035.
Business and Trade Secretary Peter Kyle said the agreement would support Britain’s pharmaceutical sector and protect high-skilled jobs. He said it also underlined the strength of the economic relationship between Britain and the United States.
Pharmaceuticals account for about a fifth of British goods exports to the United States by value, making the sector one of the most significant areas of UK-US trade.
The agreement comes as the Trump administration escalates pressure on global drugmakers. Later on Thursday, Washington said it would impose tariffs of up to 100 per cent on branded pharmaceutical imports unless manufacturers agreed to US government drug-pricing deals or committed to producing their medicines domestically.
US Trade Representative Jamieson Greer said President Donald Trump wanted trading partners to pay their “fair share” for innovative medicines so that American patients were not disproportionately carrying research and development costs.
The finalised UK-US arrangement makes Britain’s tariff exemption conditional. Major UK pharmaceutical companies must enter into, and comply with, separate US pricing and tariff agreements for the zero-tariff treatment to apply. Those provisions tie the British deal to Washington’s broader push for lower overseas drug prices and more domestic manufacturing.
The terms also indicate that changes will be needed to the appraisal framework used by the National Institute for Health and Care Excellence, the body that assesses whether medicines are cost-effective for use in the NHS. Thursday’s announcement did not set out the full detail of those changes.
Britain said the agreement would also shield medical technology exports from additional US tariffs and would provide assurances that UK companies could receive mitigations under a proposed American “most favoured nation” pricing policy, which aims to bring US drug prices closer to those paid in other developed countries.
The pharmaceutical provisions were negotiated separately from the wider US-UK trade deal signed by Trump and Prime Minister Keir Starmer in June 2025. Outline terms were unveiled in December, but Thursday’s announcement confirms the final legal text and the policy commitments attached to it.
In a separate statement, the British government said the deal would deepen co-operation between the Medicines and Healthcare products Regulatory Agency and the US Food and Drug Administration, including work towards aligning medical device regulation to speed up patient access to new technologies.
For ministers, the agreement delivers a trade win for one of Britain’s most important export industries at a time of heightened US protectionism. For the NHS, however, it is likely to reopen a debate over affordability, as the higher prices and spending commitments raise questions about how the additional costs will be absorbed within future health budgets.
The government has not yet given a detailed public breakdown of how the increase in medicines spending will be funded over the coming decade.
Industry reaction was broadly positive. GSK said it was pleased the agreement had been finalised, adding that it provided certainty on zero tariffs for medicines and improved the operating environment in Britain while rewarding innovation. The company said detailed implementation work now needed to proceed quickly.
Britain has argued that the deal protects a strategically important sector from the threat of steep US tariffs at a moment when Washington is using trade measures more aggressively in its dealings with pharmaceutical companies and foreign governments.
The United States and Britain first said in December that they had reached an agreement in principle under which the UK would pay more for new medicines in exchange for tariff protections on British pharmaceuticals, active ingredients and medical technology. Thursday’s final text locks in those commitments and clarifies the timetable for implementation.
The arrangement gives British exporters valuable certainty in the short term, but its longer-term operation will depend on both UK changes to medicines pricing and the willingness of large pharmaceutical groups to comply with the separate US agreements on pricing and production.
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