US Exempts Tariffs on British Pharmaceuticals... UK Agrees to 25% Increase in New Drug Prices

Global Pharmaceutical Companies Expected to See Improved Profitability
USTR: "Resolving the Pharmaceutical Trade Imbalance Between the Two Countries"

The United States has decided to exempt British pharmaceuticals from tariffs. In return, the United Kingdom has agreed to increase the net price of new drugs by 25 percent and to ease drug price regulations.

Jameson Greer, United States Trade Representative (USTR). Photo by Reuters Yonhap News

The United States Trade Representative (USTR) announced on December 1 (local time) that the two countries have signed an agreement regarding pharmaceuticals, with these points as its main content.

Under the agreement, the UK government will expand spending on innovative new drugs for the National Health Service (NHS), which had been reduced over the past decade, and will raise the net purchase price of new drugs by 25 percent. The NHS had previously been criticized for maintaining excessively low drug prices, but the UK has now shifted its policy to address this issue. This move is expected to directly benefit global pharmaceutical companies, including major US firms with significant market share in the UK.

Additionally, under the 'Voluntary Scheme for Branded Medicines Pricing, Access and Growth' (VPAG), the UK has pledged to lower the rebate rate that pharmaceutical companies pay to the NHS to 15 percent next year and to maintain it at or below this level in the future. The current rebate rate is reportedly around 23 percent. This reduction in the rebate rate is seen as a measure to improve the profitability of pharmaceutical companies.

In response, the United States will exclude British pharmaceuticals, pharmaceutical ingredients, and medical technologies from Section 232 tariffs under the Trade Expansion Act, and will not designate the UK's drug pricing policy as a subject of investigation under Section 301 of the Trade Act during President Donald Trump's term. This effectively means that the US will not impose item-specific tariffs on British pharmaceuticals.

The USTR expects that this agreement will help resolve the pharmaceutical trade imbalance between the two countries.

Jamison Greer, United States Trade Representative, stated, "American patients have been paying significantly higher prices for the same medicines compared to other developed countries, effectively subsidizing foreign drug prices," and added, "The Trump administration is reviewing the drug pricing policies of other trade partners as well, and we hope that they will follow the same standards as the UK through negotiations."

This content was produced with the assistance of AI translation services.