The U.S. government announced this week an agreement in principle with the United Kingdom on pharmaceutical pricing, marking a significant change in U.S. trade policy aimed at lowering drug costs for American consumers.
The agreement, part of the new U.S.-U.K. Economic Prosperity Deal (EPD), seeks to correct what U.S. officials call a “long-standing imbalance” where American patients subsidize the cost of innovative medicines for developed countries like the U.K.
Under the terms of the agreement, the United Kingdom has committed to reversing a decade-long decline in National Health Service (NHS) spending on new, life-saving medicines. Key commitments include:
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25% Price Increase: The U.K. will increase the net price it pays for new medicines by 25%.
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Reduced Rebates: The repayment rate owed by pharmaceutical companies under the current Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) will decrease to 15% in 2026 and remain at or below that level. This prevents portfolio-wide concessions from eroding the higher prices paid for new medicines.
“President Trump is the first American President to work with U.S. trading partners to ensure fair payment internationally for innovative pharmaceuticals… Today, the United States and the United Kingdom announce this negotiated outcome pricing for innovative pharmaceuticals, which will help drive investment and innovation in both countries,” Ambassador Greer of the Office of the U.S. Trade Representative said.
“For generations, America has led the world in discovering new treatments and cures for humanity’s most dreaded diseases, but for far too long other countries haven’t paid their fair share of those life-saving medical advances. Today’s announcement brings American patients one step closer to a more equitable system where other countries help shoulder the extraordinary costs and risks of finding these new treatments and cures, many of which are discovered and manufactured right here in New Jersey,” Chrissy Buteas, president and chief executive officer of the HealthCare Institute of New Jersey said.
In exchange for these commitments, the U.S. has agreed to provide several key concessions to the U.K. pharmaceutical sector:
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Tariff Exemption: The U.S. will exempt U.K.-origin pharmaceuticals, ingredients, and medical technology from Section 232 tariffs.
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No Future Investigations: The U.S. will refrain from targeting U.K. pharmaceutical pricing practices in any future Section 301 investigation for the duration of President Trump’s term.
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Access to Breakthroughs: The U.S. will also work to ensure U.K. citizens have access to the latest pharmaceutical breakthroughs.
“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,” Health and Human Services Secretary Robert F. Kennedy, Jr. said, who thanked the President for “delivering results that put Americans first.”
U.S. officials framed the agreement as a win for American workers and the domestic life-sciences industry.
“This deal doesn’t just deepen our economic partnership with the United Kingdom—it ensures that the breakthroughs of tomorrow will be built, tested, and produced on American soil,” Commerce Secretary Howard Lutnick said, adding that the deal will strengthen supply chains and create high-quality jobs.
The agreement comes less than two months after the President announced the first results of his most-favored-nation (MFN) pharmaceutical drug pricing policy. U.S. officials indicated they are reviewing the pharmaceutical pricing practices of other trading partners and hope they will follow suit.
