UK secures zero-tariff deal with US on pharmaceuticals

Highlights

• UK pharmaceutical exports worth £5bn annually protected from US tariffs for three years.
• NHS spending on medicines to double from 0.3 per cent to 0.6 per cent of GDP over next decade.
• Deal safeguards jobs at major British drugmakers including GSK and AstraZeneca.

Under the agreement announced on Monday, the NHS will pay more for medicines in return for a three-year guarantee that US import taxes on pharmaceuticals made in Britain will remain at zero per cent.

The deal comes after US President Donald Trump threatened to raise tariffs to as high as 100 per cent on branded drug imports, raising alarm for major British drugmakers including GSK and AstraZeneca.

NHS spending commitments

The UK has committed to increasing the price threshold at which it deems new treatments too expensive by 25 per cent. The NHS will also boost medicine spending from 0.3 per cent of GDP to 0.6 per cent of GDP over the next decade. Drug companies' payback to the NHS will be capped at 15 per cent down from over 20 per cent last year.

Business and Trade secretary Peter Kyle said the deal "guarantees that UK pharmaceutical exports – worth at least £5 bn 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."

Investment impact

Britain exported £11.1 bn worth of medicines to America in the 12 months to September, representing 17.4 per cent of all goods exports. Several major pharmaceutical investments in Britain have been paused or cancelled over the last 18 months.

NHS Providers chief executive Daniel Elkeles said, “This deal is potentially very good news for patients, for the NHS and for UK life sciences."

It is not yet clear how it will be paid for. There is absolutely no slack in current published NHS spending plans for this major commitment, he added.

GSK pledged $30 bn in US investments over five years in September, while American firm Merck scrapped its planned £1 bn UK expansion. AstraZeneca also paused a £200 m Cambridge research facility investment.

White House spokesman Kush Desai called the agreement a "historic step towards ensuring that other developed countries finally pay their fair share".

William Bain, head of trade policy at the British Chambers of Commerce, told the BBC "This deal is a real win. It will promote exports, boost investment, and enhance UK competitiveness."