US, UK agree to zero tariffs on medicines; UK commits to higher spending | International Trade News

Expenditure growth will remain unchanged for at least the next three years.

The United States has announced a new trade deal with the United Kingdom that includes zero tariffs on pharmaceutical and medical products in exchange for the UK spending more on medicines, the first significant spending increase in more than 20 years, and a change in how it values ​​medicines.

As part of the deal announced on Monday, the state-run National Health Service (NHS) will spend 25 percent more on treatment for at least the next three years.

“The United States and the United Kingdom have announced the results of this negotiation on pricing for innovative pharmaceuticals, which will help promote investment and innovation in both countries,” U.S. Trade Representative Jamieson Greer said in a statement.

Under the agreement, Britain will see a 25 percent increase in the net price paid for new drugs, the USTR statement said. In return, UK-made medicines, drug ingredients and medical technology will be exempted from so-called Section 232 regional tariffs and any future Section 301 country tariffs.

Two sources familiar with the deal said it involves a major change to the value assessment framework at the National Institute for Health and Care Excellence (NICE), the UK government body that determines whether new medicines are cost-effective for the NHS, the sources said.

NICE’s “quality-adjusted life year” measures the cost of treatment to a patient for each healthy year added, with an upper limit of £30,000 ($39,789) per year.

US President Donald Trump has pressured the UK and the rest of Europe to pay more for US drugs, part of his push to bring their costs in line with payments in other rich countries.

The pharmaceutical industry has criticized the difficult operating environment in the UK, and some large companies have canceled or halted investments in the UK, including AstraZeneca, the largest on the London Stock Exchange by market value.

One point of contention between the sector and the government has been the operation of a voluntary pricing scheme, whereby companies put a portion of sales to the NHS back into the health service.

USTR’s office said the UK has committed that the discount rate will drop to 15 percent in 2026.

‘Advanced Medicines’

British Science and Technology Minister Liz Kendall said on Monday that a new pharmaceutical deal with the US would encourage life sciences companies to continue investing and innovating in the UK.

“This important deal will ensure UK patients get the cutting-edge medicines they need sooner, and our world-leading UK companies will continue to develop treatments that can change lives,” Kendall said in a statement.

“It will also enable and encourage life sciences companies to continue investing and innovating in the UK,” Kendall said.

Bristol Myers Squibb is also included in those companies. The CEO of the pharmaceutical giant said that due to the deal he will be able to invest more than $500 million over the next five years.

On Wall Street, the stock, which trades under the ticker symbol BMY, is down 0.1 percent. Other heavily hit pharmaceutical companies included AstraZeneca, which was down about 1 percent, and GSK, down 0.4 percent.