The UK and US have come to an agreement that means UK pharmaceutical exports to the USA will be subject to zero tariffs for the next three years.
In exchange, the UK has agreed to pay 25% more in net price for new medicines used by the National Health Service (NHS) and make changes to ensure fair pricing.
Specifically, the UK will make changes to ensure that higher prices for new medicines are “not materially eroded” by concession schemes such as the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG).
The VPAG scheme, which currently requires companies to repay 23.5% of their NHS sales revenues, will be capped at 15% for the next three years. Beyond this, government and industry will work to agree a new sustainable model from 2029 onwards.
The agreement is part of the wider UK-US Economic Prosperity Deal. It sees the UK become the only country globally to secure a zero-percent tariff on exports of pharmaceuticals, pharmaceutical ingredients and medical technology to the USA.
The US government will also refrain from targeting UK pharmaceutical pricing practices in any future Section 301 investigation during the remainder of US President Donald Trump’s current term.
UK-US deal expected to drive pharma investment
“This deal guarantees that UK pharmaceutical exports – worth at least £5 billion a year – will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences,” commented UK business and trade secretary Peter Kyle.
Additionally, with pharmaceuticals making up a fifth of all UK exports to the US, William Bain, head of trade policy at the British Chambers of Commerce, described the deal as a “real win” that will “promote exports, boost investment, and enhance UK competitiveness as a base for world-leading medicines”.
The move has also been welcomed by the pharmaceutical industry, providing renewed confidence for big pharma such as Moderna, Bristol Myers Squibb and BioNTech that are planning to invest in UK facilities.
Ambassador Jamieson Greer, US trade representative, also said that the deal “will help drive investment and innovation in both countries”.
The US health secretary, Robert F. Kennedy, Jr, added: “This agreement with the United Kingdom strengthens the global environment for innovative medicines and brings long-overdue balance to US–UK pharmaceutical trade.”
The UK is the first country to benefit from the zero tariffs on pharmaceutical exports to the US. In July 2025, the European Union agreed a new trade deal that will see it pay a 15% tariff on goods going into the US, including medicines.
