UK and US agree zero-tariff pharmaceuticals deal

Core Points - The UK government has secured a deal with the Trump administration to maintain zero tariffs on UK pharmaceutical imports into the US and increase NHS spending on drugs [1][2] - The agreement aims to ensure continued investment by UK pharmaceutical companies in the US and is expected to create jobs in the US [1] - The NHS will increase the net price it pays for new medicines by 25%, addressing concerns about the competitiveness of the current drugs-purchasing agreement [3][6] Trade and Pricing Arrangements - Trade in medicines has been largely duty-free under a 1994 WTO agreement, but tariffs were imposed by the Trump administration affecting imports from the UK and EU [4] - The new deal includes a reduction in the "rebate" payments that drug companies make to the NHS, which currently range from 23.5% to 35.6% of revenue from branded medicines [5][6] - The average rebate rates in other European countries are significantly lower, indicating potential for reform in the UK's arrangements [6] Negotiation and Strategic Context - Negotiations were led by key figures including Varun Chandra and Patrick Vallance, highlighting the importance of government involvement in pharmaceutical policy [7] - The Trump administration is also pushing for US drug companies to lower their prices to align more closely with those in the UK and other developed countries [7] - There are ongoing threats of high tariffs on pharmaceutical imports to encourage domestic manufacturing in the US, particularly in competition with countries like India and China [8]