The Trump administration has reached a landmark deal with the United Kingdom on pharmaceutical pricing, resolving a long-standing trade dispute. The U.S. has agreed to exempt tariffs on British drugs, while the U.K. will substantially increase prices for new drugs by expanding NHS spending on medications. This agreement effectively addresses the pharmaceutical trade imbalance that has been a point of contention between the two nations for years.
On Monday, the United States Trade Representative (USTR) announced that under the Economic Prosperity Deal (EPD), U.S. President Donald Trump and U.K. Prime Minister Keir Starmer have agreed on measures to tackle the persistent imbalance in pharmaceutical trade. The USTR hailed this as a historic agreement resolving a longstanding issue between the two countries.
The USTR revealed that the U.K. government has committed to a 25% increase in the net price of new drug purchases to boost spending on innovative medications, which has seen a decline over the past decade. Simultaneously, pharmaceutical companies will see a significant reduction in the rebate rates they pay to the NHS. The rebate rate under the U.K.’s Voluntary Scheme for Branded Medicines Pricing and Access (VPAG) was previously around 23%. The U.K. has pledged to lower this to 15% next year and maintain it below that level thereafter.
The U.S. will reciprocate with its own concessions. In exchange for these commitments, the USTR stated that the U.S. has agreed to exempt British pharmaceuticals, pharmaceutical raw materials, and medical technologies from tariffs under Section 232 of the Trade Expansion Act. Furthermore, the U.S. has committed not to investigate the U.K.’s pharmaceutical pricing practices under Section 301 of the Trade Act during Trump’s term. This effectively signals that the U.S. will not impose product-specific tariffs on British pharmaceuticals.
USTR representative Jamieson Greer stated, “For too long, American patients have been forced to subsidize prescription drugs and biologics in other developed countries by paying a significant premium for the same products in ours.” He added, “The Trump Administration is reviewing the pharmaceutical pricing practices of many other U.S. trading partners and hopes that they will follow suit with constructive negotiations.”
U.S. Secretary of Commerce Howard Lutnick stated, “Today’s agreement is a major win for American workers and our innovation economy. We are strengthening supply chains, creating high-quality jobs, and reinforcing America as the world’s premier hub for life-sciences investment.”
