The UK and US have agreed a deal that keeps tariffs on UK pharmaceutical shipments to America at zero for three years. In return, the UK will increase what the NHS pays for new treatments and raise overall medicines spending to stimulate access and investment.
The agreement guarantees a 0% tariff for UK-origin pharmaceuticals entering the US for a three-year period. The UK will raise by 25% the price threshold at which new medicines are judged too expensive, and it will target an increase in NHS medicines spending from 0.3% of GDP to 0.6% over the next decade. The industry rebate that companies pay back to the NHS will be capped at 15%, after exceeding 20% last year.
Business and Trade Secretary Peter Kyle said the deal “guarantees that UK pharmaceutical exports – worth at least £5bn 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.” The Department for Business and Trade reported that in the 12 months to the end of September, the UK exported £11.1bn of medicines to the US, accounting for 17.4% of all goods exports in that period. White House spokesman Kush Desai called the agreement a “historic step”, while US Health Secretary Robert Kennedy Jr said it “brings long-overdue balance to U.S.–U.K. pharmaceutical trade”.
While William Bain, Head of Trade Policy at the BCC, said: “This deal is a real win. It will promote exports, boost investment, and enhance UK competitiveness as a production and innovation base for world-leading medicines and treatments.”
Tariff free access to the US market is welcome and timely. Pharmaceuticals account for a significant share of UK exports to the US, and the Thames Valley sits at the heart of that trade. This deal should promote exports, boost investment plans and enhance the UK’s competitiveness as a production and innovation base. The next step is operational, not theoretical. Firms should lock in correct HS codes, solid rules of origin and watertight temperature-controlled documentation, so opportunities can be seized quickly.
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