UK first country to secure zero-tariff US pharmaceuticals deal

The UK government has secured a new, three-year zero-tariff deal on pharmaceutical exports to the US, the lowest rate on medicines to the US offered thus far to any country.

The agreement protects UK-based manufacturing, and according to Business and Trade Secretary Peter Kyle, “guarantees that UK pharmaceutical exports – worth at least £5 billion a year – will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences.”

The deal is part of the UK government’s Modern Industrial Strategy and Life Sciences Sector Plan, and follows the government’s recent Autumn Budget.

Importantly, the agreement, Science and Technology Secretary, Liz Kendall, noted: “will also enable and incentivise life sciences companies to continue to invest and innovate right here in the UK.” 

Bristol Myers Squibb Board Chair and CEO, Chris Boerner, said: “Based on the UK commitments and increased investment in innovative medicines underpinning this agreement, BMS anticipates being able to invest upwards of $500 million over the next five years.

“This investment will come across multiple areas of the business including research, development, and manufacturing. This agreement is a sign of progress and one that creates an environment conducive to our continued presence in the UK.”

Paul Evans, President and Chief Executive of Velocity Clinical Research, noted that “while tariffs on EU–US pharmaceutical trade were expected to be capped at up to 15 percent under arrangements discussed earlier this year, the UK’s guarantee of a zero-tariff rate creates a real incentive for drug manufacturers to develop and export their products from the UK rather than competing markets in the EU, like Spain or France.

“This is a further mandate for growth at a time when trial activity is rebounding, sponsors are reinvesting, and more late-stage programmes are coming online, particularly in areas such as obesity, metabolic disease, neuroscience, and vaccines.”

Accelerating access to medicines on the NHS

Additionally, a key aspect of the trade deal is an increased baseline threshold for the National Institute for Health and Care Excellence (NICE) to assess if medicines can be used by the NHS, the first major increase in over twenty years.

It calls for rapid talks between the Association of the British Pharmaceutical Industry (ABPI) and the UK government to design and agree a new, more sustainable Voluntary Scheme for Branded Medicines Pricing and Access (VPAG) scheme from 2029 onwards.

Richard Torbett, Chief Executive of the ABPI, said: “These commitments begin to address industry concerns on NHS access to medicines, and the UK’s record-high and unpredictable payment rate. There remain a great many details to work out and further technical improvements to make, but with this strong and positive progress, I look forward to working with the government to ensure this plan delivers for the NHS, Patients and UK industry.”

However, Ed Wilson, Professor of Health Economics and Health Policy, University of Exeter, cautioned: “the best evidence we have tells us the NHS generates the equivalent of one year of perfect health for every £5,000 to £15,000 spent, suggesting NICE’s threshold was already too high. 

“Increasing it to £25,000 means we have to cut back even more on other services to pay the higher drug prices, so perversely this decision will likely end up reducing the overall health of NHS patients, not improving it.”