The Trump administration has lined up another country-specific trade agreement, this time with the U.K., which confers Washington’s biggest break on pharmaceutical import tariffs yet.
For its part, the U.K.—which has faced fierce policy scrutiny from the biopharma industry in recent months—will draft key changes to the way it pays for and appraises the value of drugs.
Monday morning, the U.S. government unveiled an agreement in principle with the U.K. that will "exempt U.K.-origin pharmaceuticals, pharmaceutical ingredients, and medical technology" from the administration's industry-specific tariffs.
The tariff exemption on medicines and related products will last for "at least" three years, according to a separate release from the U.K. government.
Additionally, the U.S. has agreed to "refrain from targeting U.K. pharmaceutical pricing practices in any future Section 301 investigation for the duration of President Trump's term," the U.S. Office of the United States Trade Representative, the Commerce Department and the Department of Health and Human services (HHS) said in a joint Dec. 1 press release.
In exchange, the U.K. will boost the net price its National Health Service (NHS) pays for novel treatments by 25%, the countries said.
The British government has also pledged to prevent higher prices for new drugs from being "materially eroded by a demand for portfolio-wide concessions" under its Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) scheme or other drug cost rebate schemes, the release from the U.S. government continues.
Further, the agreement will alter the framework under which Britain’s drug cost watchdog, the National Institute for Health and Care Excellence (NICE), judges the value of innovative medicines.
The change will be reflected in the organization’s “quality-adjusted life year” metric, which measures the cost of a treatment for each healthy year it affords a patient. NICE uses its quality-adjusted life year metrics when weighing whether to recommend a drug for NHS coverage.
The deal is expected to bolster major biopharma investment across both countries, their respective governments said Monday.
“This agreement with the United Kingdom strengthens the global environment for innovative medicines and brings long-overdue balance to U.S.–U.K. pharmaceutical trade," HHS secretary Robert F. Kennedy Jr. said in a statement.
Commitments from the U.K. to increase spending on innovative drugs align with the Trump administration’s “most favored nation” drug pricing strategy. The tactic, which has already yielded a series of drug pricing agreements in the U.S., broadly seeks to align the costs for pharmaceuticals in the U.S. with the lower prices paid in other comparable developed nations.
The move is also likely to appease prominent biopharma players operating in the U.K. by ascribing greater value to their drugs. Earlier this year, several large drugmakers pulled or paused projects in the U.K. over perceived flaws in the country’s valuation of novel drugs and the country’s attractiveness for future life sciences investments.
The trade agreement marks the latest in a series of country-specific deals penned by the Trump administration.
Among those prior agreements with countries and authorities like Switzerland, Japan and the EU, the U.S. has capped import tariffs on many goods—including drugs—at 15% and largely exempted generic medicines from trade duties.
Across the pond, meanwhile, several pharma giants appeared to sour on the U.K. business environment earlier this year.
In September, Merck & Co. announced it was pulling out of a new R&D center in London and nixing all research and development work in Britain. At the time, a company spokesperson told Fierce Biotech that the move reflected “the challenges of the U.K. not making meaningful progress towards addressing the lack of investment in the life science industry and the overall undervaluation of innovative medicines and vaccines by successive U.K. governments.”
Around the same time, Sanofi said it would temporarily freeze “any substantial investment” in U.K. drug R&D following a breakdown in industry pricing talks. And AstraZeneca—the biggest company on the London Stock Exchange (LSE) by market value—likewise paused a 200-million-pound investment in its Cambridge, England, research site.
AstraZeneca is among the handful of drugmakers to strike a most-favored nation drug pricing deal with the U.S. government, which has afforded the British drug giant a “three-year grace period” from President Donald Trump’s pharmaceutical tariffs.
In late September, AstraZeneca also announced plans to list its shares directly on the New York Stock Exchange, while maintaining listings on the LSE and Nasdaq Stockholm as well. AZ has said it expects its shares to be listed stateside Feb. 2, 2026.