The UK and the US have struck a deal that guarantees zero tariffs on British pharmaceuticals shipped to America for the next three years.
Under the terms, the UK will raise the price threshold for new treatments and increase overall NHS spending on medicines from 0.3% of GDP to 0.6% over the next decade. In return, US import taxes on UK-made drugs will remain at zero, protecting a key export worth at least £5 billion a year.
Business and Trade Secretary Peter Kyle called it a “guarantee that UK pharmaceutical exports 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.”
This zero-tariff deal follows repeated threats from President Donald Trump to impose tariffs of up to 100% on branded drug imports. US officials argued that American consumers were effectively subsidizing the cost of medicines for other developed nations and sought to bring more production stateside.
NICE, the UK’s advisory body, expects three to five additional medicines a year to be approved, potentially raising costs by around £3 billion.
While some see this as a necessary investment in innovation, others, like Sally Gainsbury from the Nuffield Trust think tank, warn it’s “bad news” given budget restraints. “The extra cost will need to be fully-funded by the Treasury,” she said, adding that stretched budgets may be better spent on GP services or reducing hospital backlogs.
Pharmaceutical investment in the UK has seen turbulence recently. GSK, Merck, and AstraZeneca all shifted focus to the US, pausing or cancelling UK expansions. This deal could reverse that trend: Bristol Myers Squibb has already indicated it could invest over $500 million in the UK over the next five years in research, development, and manufacturing.
William Bain from the British Chambers of Commerce called the deal “a real win,” highlighting its potential to boost exports, investment, and the UK’s competitive position in global life sciences.
For investors, this agreement signals stability in UK pharmaceutical exports to the US and could create a more predictable environment for both domestic and international pharma companies.
With the UK bolstering its life sciences sector, potential openings in manufacturing, R&D, and supply chain investments are starting to take shape.
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