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US and UK Ink Zero-Tariff Deal on Pharmaceuticals, NHS to See Price Hike
The United States and the United Kingdom have finalized a trade agreement that will eliminate tariffs on medications manufactured in the UK for the next three years. This marks a significant development, though it comes with a notable change for the UK’s National Health Service (NHS), which will now pay more for these medications-a first in over two decades.
Pharmaceuticals represent one of the UK’s largest exports to the US. The deal comes after a period of uncertainty, with President Donald Trump having previously threatened to impose a 100% tariff on these goods in September. Trump has also recently announced new tariffs, including a 25% levy on heavy-duty trucks and a 50% tariff on kitchen and bathroom cabinets, citing a “FLOODING” of these products into the US from other countries.
However, some experts are downplaying the broader impact of the pharmaceutical agreement. Neil Shearing, chief economist at Capital Economics, noted to the BBC that many major pharmaceutical companies already have, or are planning, production facilities within the US.
Despite this, the UK government is highlighting the benefits of the deal. A press release stated that the agreement will “secure and expand access to vital drugs, safeguard our medicines supply chain, and drive crucial investment while supporting U.K. patients and industries,” benefiting “tens of thousands of NHS patients.”
A key component of the deal includes a substantial investment from the UK government, increasing spending on “innovative, safe, and effective treatments” by approximately 25%-the first major increase in over two decades. This will enable the National Institute for Health and Care Excellence (NICE) to approve medicines that deliver significant health improvements, even if they were previously deemed too costly. This could include groundbreaking cancer treatments, therapies for rare diseases, and new approaches to challenging conditions.
Science and Technology Secretary Liz Kendall emphasized the domestic impact, stating, “This will support thousands of skilled jobs, boost our economy and ensure that the breakthroughs that happen in our labs turn into treatments that benefit families across the country.”
Business and Trade Secretary Peter Kyle further added, “This deal guarantees that UK pharmaceutical exports-worth at least $6.6 billion a year-will enter the U.S. tariff free, protecting jobs, boosting investment and paving the way for the U.K. to become a global hub for life sciences.”