UK Scores Major Win with Zero-Tariff Deal Protecting Billion-Pound Pharma Exports

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Prime Highlights:

  • The UK and US have reached a breakthrough deal to keep tariffs at zero for all British pharmaceutical exports for the next three years.
  • The agreement strengthens the UK’s life sciences sector and secures billions in trade, offering stability for future investment.

Key Facts:

  • The UK exported £11.1 billionworth of medicines to the US in the past year, making the US its largest market for pharma goods.
  • The deal guarantees tariff-free access for UK drug manufacturers, protecting over £5 billionin annual pharma exports and safeguarding jobs and investment.

Background:

The United Kingdom has secured a major agreement with the United States to keep tariffs at zero on British pharmaceutical exports for the next three years, protecting one of the UK’s most important export industries.

Under the deal, the UK has agreed to raise the price threshold at which new drugs are considered too costly and to increase long-term NHS spending on medicines. This marks the first time in more than two decades that the NHS will pay more for treatments, as part of a wider effort to ease tensions over what the US views as an imbalance in global drug pricing.

Business and Trade Secretary Peter Kyle said the agreement ensured continued tariff-free access for UK pharmaceuticals, worth over £5 billion annually, and would strengthen the country’s position as a global hub for life sciences. Government data shows the UK exported £11.1 billion worth of medicines to the US in the year to September, accounting for more than 17% of all goods exports.

The new terms also cap the amount drug companies must reimburse the NHS at 15%, down from over 20% last year. In return, US officials have confirmed that tariff protections will remain in place, with the White House calling the deal a “historic step” toward fairer pharmaceutical trade.

The agreement comes amid increasing pressure on the UK’s life sciences sector, following several major investment shifts toward the US. Recent months have seen GSK pledge $30bn to American research and manufacturing, while Merck (MSD) cancelled a planned £1bn UK expansion and AstraZeneca paused a £200m research investment.

Industry groups welcomed the stability provided by the new tariff protections. William Bain of the British Chambers of Commerce said the agreement would boost exports and reinforce the UK’s competitiveness. US giant Bristol Myers Squibb also signalled plans to invest more than $500m in the UK over the next five years, citing a stronger business environment.

Despite financial concerns, the UK government emphasised that it is now the only country with a guaranteed zero-tariff arrangement for pharmaceutical exports to the US, a critical win as global competition for life sciences investment intensifies.