- UK Commits to Higher Spending
Washington/London, December 2, 2025 (Agencies) — The United States and the United Kingdom have reached a landmark trade agreement eliminating tariffs on pharmaceutical and medical products, with the UK committing to a significant increase in healthcare spending.
Announced Monday, the deal requires the UK’s National Health Service (NHS) to spend 25 percent more on treatments for at least the next three years — the first major spending increase in over two decades. In exchange, UK-made medicines, drug ingredients, and medical technology will be exempt from Section 232 sectoral tariffs and any future Section 301 country tariffs.
“The United States and the United Kingdom announce this negotiated outcome pricing for innovative pharmaceuticals, which will help drive investment and innovation in both countries,” said US Trade Representative Jamieson Greer.
Sources familiar with the agreement said it involves a major overhaul of the National Institute for Health and Care Excellence (NICE) appraisal framework, which determines whether new drugs are cost-effective for the NHS. NICE’s current “quality-adjusted life year” model sets a threshold of £30,000 ($39,789) per year of healthy life gained.
The deal comes amid pressure from US President Donald Trump, who has urged the UK and Europe to pay more for American medicines, arguing that costs should be aligned with those in other wealthy nations.
The pharmaceutical industry has long criticized the UK’s tough operating environment, with major firms such as AstraZeneca pausing or cancelling investments. A key point of contention has been the voluntary pricing scheme, under which companies return a proportion of sales to the NHS. Under the new agreement, the rebate rate will fall to 15 percent in 2026, according to the USTR.
Analysts say the deal could reshape the UK’s drug pricing landscape, boost investment in the sector, and strengthen transatlantic cooperation in healthcare innovation.