In a significant move aimed at reshaping pharmaceutical pricing, the United States and the United Kingdom have reached a tentative agreement. This agreement was announced jointly by the Office of the United States Trade Representative, the Department of Commerce, and the Department of Health and Human Services.
Key Features of the Agreement
The agreement is part of the broader Economic Prosperity Deal (EPD) between the two nations. During discussions, President Trump and Prime Minister Starmer highlighted their commitment to addressing historical imbalances in pharmaceutical trade.
- Price Increase: The U.K. will increase its net price for new medicines by 25%, reversing a decade-long decline in National Health Service (NHS) expenditures on innovative medicines.
- Protection from Rebate Demands: The U.K. has pledged that the prices for new medicines will not be diminished by demands for portfolio-wide concessions under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG).
- Decreased Repayment Rates: The repayment rate for pharmaceutical companies under the current VPAG scheme will drop to 15% by 2026.
Partnership Enhancements
This agreement is expected to bolster pharmaceutical investments in the U.S. by U.K. companies, reinforcing America’s leadership in pharmaceutical development. Ambassador Greer emphasized that U.S. patients should no longer bear the burden of high drug prices while subsidizing costs for other countries. Secretary Howard Lutnick referred to the deal as a victory for American innovation.
Implications for Future Negotiations
The deal indicates the Trump Administration’s intent to address pharmaceutical pricing practices with other trading partners as well. Chris Klomp, Director of Medicare, expressed that fair cost-sharing among nations can enhance global healthcare efforts.
Tariff Exemptions and Commitments
As part of the negotiations, the U.S. will exempt U.K.-origin pharmaceuticals from Section 232 tariffs. There also will be no future Section 301 investigations targeting U.K. pricing practices during President Trump’s term. This ensures that U.K. citizens retain access to the latest pharmaceutical advancements.
Health and Human Services Secretary Robert F. Kennedy, Jr. acknowledged the essential balance this agreement brings to U.S.–U.K. pharmaceutical trade, expressing gratitude for the leadership shown in achieving these reforms.
