Spending increases will be maintained for at least the next three years.
Published December 1, 2025
The US has announced a new trade deal with the UK. It includes zero tariffs on medicines and medical products in exchange for more spending on medicines in the UK (the biggest increase in spending in more than 20 years) and an overhaul of the way medicines are valued.
As part of the deal announced on Monday, the state-run National Health Service (NHS) will increase treatment costs by 25% for at least the next three years.
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“The United States and the United Kingdom will announce negotiated prices for innovative medicines, which will help drive investment and innovation in both countries,” U.S. Trade Representative Jamison Greer said in a statement.
The USTR statement announced that the UK would increase the net price it pays for new drugs by 25% under the agreement. In return, UK-made medicines, pharmaceutical ingredients and medical technology will be exempt from so-called Section 232 sectoral tariffs and future Section 301 national tariffs.
Two sources familiar with the deal said it included significant changes to the value assessment framework of the National Institute for Health and Care Excellence (NICE), the UK government body that determines whether new medicines are cost-effective for the NHS.
NICE’s ‘quality-adjusted life-year’ measures the cost of care for each healthy year of care for a patient, with an upper limit of £30,000 ($39,789) per year.
US President Donald Trump is pressuring Britain and other European countries to pay more for US medicines, as part of a push to bring their costs more in line with those paid in other wealthy countries.
The pharmaceutical industry has criticized Britain’s difficult operating environment, with some major companies, including AstraZeneca, the largest company on the London Stock Exchange by market capitalization, canceling or suspending investments in the country.
One of the points of contention between industry and the government is the operation of a voluntary pricing system in which companies give back a portion of their NHS sales to health services.
The USTR office said the UK has committed to lowering the rebate rate to 15% in 2026.
“Cutting-edge medicine”
Britain’s science and technology minister, Liz Kendall, said on Monday that a new medicines deal with the US would encourage life sciences companies to continue investing and innovating in the UK.
Mr Kendall said in a statement: “This important agreement will give UK patients faster access to the cutting-edge medicines they need and enable world-leading UK companies to continue developing potentially life-changing treatments.”
“It will also enable and encourage life sciences companies to continue to invest and innovate here in the UK,” Kendall added.
Among those companies is Bristol-Myers Squibb. The pharmaceutical giant’s CEO said the partnership will enable it to invest more than $500 million over the next five years.
On Wall Street, the stock, which trades under the ticker symbol BMY, was down 0.1%. Other hard-hit drug companies include AstraZeneca, which fell about 1%, and GSK, which fell 0.4%.
