US government confirms agreement in principle with UK on pharmaceutical pricing

The Office of the United States Trade Representative, the Department of Commerce, and the Department of Health and Human Services issued statements announcing an agreement in principle on pharmaceutical pricing between the United States and the United Kingdom. In the historic U.S.-U.K. Economic Prosperity Deal, President Trump and Prime Minister Starmer agreed to address long-standing imbalances in U.S.-U.K. pharmaceutical trade by improving the overall environment for pharmaceutical companies operating in the United Kingdom. The EPD also secured continued investment by U.K. pharmaceutical companies in the United States, further strengthening American leadership in pharmaceutical development and manufacturing. “President Trump is the first American President to work with U.S. trading partners to ensure fair payment internationally for innovative pharmaceuticals and pharmaceutical ingredients. For too long, American patients have been forced to subsidize prescription drugs and biologics in other developed countries by paying a significant premium for the same products in ours,” said Ambassador Greer. Pursuant to the terms of the pharmaceutical pricing agreement in principle announced today, the United Kingdom will reverse the decade-long trend of declining National Health Service expenditures on innovative, life-saving medicines, and increase the net price it pays for new medicines by 25%. Furthermore, the United Kingdom will ensure that higher prices for new medicines are not materially eroded by a demand for portfolio-wide concessions under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth or other rebate schemes. In fact, the United Kingdom has committed that the repayment rate owed by companies under the current VPAG scheme will decrease to 15% in 2026 and remain at or below that level for the duration of the scheme. In exchange for these and other commitments, the United States has agreed to exempt U.K.-origin pharmaceuticals, pharmaceutical ingredients, and medical technology from Section 232 tariffs and will refrain from targeting U.K. pharmaceutical pricing practices in any future Section 301 investigation for the duration of President Trump’s term. Further, the United States will work to ensure that U.K. citizens have access to the latest pharmaceutical breakthroughs. Publicly traded companies in the space include AstraZeneca (AZN), Bristol Myers (BMY), Eli Lilly (LLY), GSK (GSK), Johnson & Johnson (JNJ), Merck (MRK), Novartis (NVS), Pfizer (PFE), Roche (RHHBY) and Sanofi (SNY).