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As part of the U.S.–U.K. trade deal secured in May, the U.S. Trade Representative, Department of Commerce and the Department of Health and Human Services announced an agreement in principle on pharmaceutical pricing with the U.K.

• The U.K. agreed to increase the price it pays for new medicines and committed to reducing pharma companies’ repayment rate under its current rebate scheme.
• In exchange, the U.S. will exempt the U.K. from Section 232 tariffs on pharmaceuticals and medical devices.

Price increase: The U.K. agreed to pay 25% more for new medicines. To accomplish this, the U.K. government announced  that they will make two changes to the way they evaluate medicines:

• The National Institute for Health and Care Excellence will change the way it evaluates medicines’ value for money, including by increasing NICE’s cost-effectiveness thresholds from £20,000–30,000 to £25,000–35,000 for the quality adjusted life year gained over and above current treatments.
• The U.K. will also implement new numerical values used to evaluate how various treatments impact the health-related quality of life of U.K. patients.

Lower rebate repayment: The U.K. committed to reduce the repayment/rebate rate owed by companies under the current Voluntary Scheme for Branded Medicines Pricing, Access and Growth scheme to 15% starting in 2026.

• According to the USTR statement, this will ensure that higher prices for new medicines are not “materially eroded” by existing rebate schemes.

Section 232 exemption: In exchange for these commitments, the U.S. will exempt U.K.-origin pharmaceuticals, pharmaceutical ingredients and medical technology from Section 232 tariffs.

• In addition, the U.S. will refrain from targeting U.K. pharmaceutical pricing practices in any future Section 301 investigations during the remainder of the Trump administration.
• The U.S. has also committed to work to ensure that U.K. citizens have access to the latest U.S. pharmaceutical breakthroughs.

What they’re saying:  Reactions to the agreement have been generally positive on both sides of the Atlantic with the U.K. noting it is the only country in the world to secure 0% tariff on pharmaceuticals to the U.S.

• USTR Ambassador Jamieson Greer said the deal will “drive investment and innovation” in both countries with HHS Secretary Robert Kennedy noting that the deal “brings long-overdue balance to U.S.–U.K. pharmaceutical trade.”

What’s next: As noted, the deal is in principle only, and the full text of the agreement has yet to be released.