BREAKING: The United Kingdom has just clinched a major trade deal with the United States, securing zero tariffs on UK pharmaceutical products in exchange for a 25% price hike on new US medicines. This urgent agreement, announced today, marks a significant shift in the pharmaceutical landscape, impacting both nations’ healthcare systems and economies.
Under this groundbreaking deal, UK-made medicines, drug ingredients, and medical technology will be exempt from Section 232 sectoral tariffs and any future Section 301 country tariffs. The move is aimed at fostering increased investment and innovation in the pharmaceutical sector, according to United States Trade Representative Jamieson Greer.
The UK will raise the net price it pays for new US medicines, while also overhauling the way it evaluates drug pricing. The NICE framework, which assesses the cost-effectiveness of new drugs for the National Health Service (NHS), will see its threshold rise from £30,000 (approximately $60,600) to £35,000 per quality-adjusted life year. This change is intended to align with the current commercial realities faced by pharmaceutical companies, enabling better access to new medicines for UK patients.
This agreement is particularly significant as it addresses longstanding issues with NICE’s evaluation processes, which have often led to the rejection of costly new treatments, such as Eli Lilly’s Alzheimer’s drug and AstraZeneca’s breast cancer treatment, Enhertu. The British pharmaceutical industry group, ABPI, welcomed the deal, stating it would enhance patients’ access to innovative therapies while attracting investment from drug manufacturers.
While shares in UK-based drugmakers GSK and AstraZeneca remained relatively stable following the announcement, the deal’s implications are profound. The UK market represents a mere two percent of AstraZeneca’s total revenue, underscoring the need for broader access to international markets.
The British Chambers of Commerce applauded the agreement, noting that pharmaceuticals constitute a fifth of all UK exports to the US by value. They emphasized that this deal provides the UK with a distinct advantage in the global market, a crucial factor as the country strives to secure its position post-Brexit.
This deal is a culmination of talks that began in May 2023, when the two nations agreed to pursue “significantly preferential treatment outcomes on pharmaceuticals.” It resolves a major unresolved issue, following the UK’s previous success in securing tariff relief on other sectors.
As the US Government races to finalize additional trade agreements before the upcoming Supreme Court ruling on tariffs, this deal could set a precedent for future negotiations. Ryan Majerus, a partner at King & Spalding law firm, highlighted the urgency of completing these agreements to ensure stability amid potential legal challenges.
Expect further developments as both governments work to implement this significant agreement and its implications for the pharmaceutical landscape. Stay tuned for updates on how this deal will reshape access to medicines in the UK and influence US pharmaceutical pricing strategies.
