UK and US agree zero tariff deal on pharmaceuticals

The UK has sealed a deal to give the US zero tariffs on pharmaceutical products imported into the country, in return for the NHS spending more on medicines.

Import taxes on medicines and treatments will remain at 0% for three years, the UK Government said.

The Trump administration said the deal will lead to further investment by UK drugs firms in the US and create more jobs.

It comes after warnings that US pharma firms will shut down their sites in the UK if the NHS does not pay more for drugs.

Earlier this month, US ambassador Warren Stephens said further American businesses will axe future investments if “there are not changes made and fast”.

The row has been seen as a reason why US-based Merck and AstraZeneca cancelled or paused investments in the UK in recent months.

As part of the deal, the Government has agreed to increase the upper threshold for which it can buy new medicines by 25%.

It said this means that new medicines that might have previously been declined for not being cost-effective enough can be approved – such as breakthrough cancer treatments and therapies for rare diseases.

The agreement also includes lowering repayment rates on NHS drug prices to 15% from 2026.

This is the amount that drugs firms pay back to the NHS to ensure it does not overspend its allocated budget for branded medicines.

Science and Technology Secretary Liz Kendall said: “This vital deal will ensure UK patients get the cutting-edge medicines they need sooner, and our world-leading UK firms keep developing the treatments that can change lives.”

Business and Trade Secretary Peter Kyle said the deal “guarantees that UK pharmaceutical exports – worth at least £5 billion a year – will enter the US tariff-free”.

The 0% rate will apply to all UK pharmaceuticals exports for at least three years, which the Government said is the lowest offered to any country.

The Association of the British Pharmaceutical Industry (ABPI) said the trade deal with the US was “an important step towards ensuring patients can access innovative medicines needed to improve wider NHS health outcomes”.

Richard Torbett, chief executive of the ABPI, said: “It should also put the UK in a stronger position to attract and retain global life science investment and advanced medicinal research.

“These commitments begin to address industry concerns on NHS access to medicines, and the UK’s record-high and unpredictable payment rate.”

Conservative shadow business secretary Andrew Griffith welcomed the deal, but criticised a lack of “detail” from the Government.

He said: “There is still no clarity on how the NHS will fund higher drug costs or how this agreement will genuinely help British patients.”