By Bloomberg December 1, 2025, 9:36:52 PM IST (Published)
The Trump administration reached an agreement with the UK to allow tariff-free imports of pharmaceuticals in exchange for a significant reduction in rebates drugmakers pay to Britain’s National Health Service.
The Office of the US Trade Representative said the US will “exempt UK-origin pharmaceuticals, pharmaceutical ingredients, and medical technology from Section 232 tariffs.” It also said the US will “refrain from targeting UK pharmaceutical pricing practices” in certain trade investigations during President Donald Trump’s term.
Earlier this year the two countries set a broader tariff framework for British goods but had not resolved treatment of key products such as medicines. Under the deal, the UK will raise the net price it pays for new medicines by about 25%, and the rebate drugmakers pay to the NHS will be capped at a maximum of 15%, down from roughly 23%, people familiar with the matter said ahead of the announcement.
The Times first reported the UK was preparing to unveil the pact. The Department for Business and Trade did not respond to requests for comment.
Britain uses the voluntary scheme for branded medicines pricing, access and growth (VPAG) to limit NHS spending on drugs. If spending exceeds a set level, companies pay money back to the government via rebates. Drugmakers have complained they pay larger clawbacks in the UK than in other European countries.
The Trump administration has offered similar relief to other trading partners, including capping the rate applied to drugs from the European Union at 15%. Washington has used Section 232 — which allows tariffs on goods deemed vital to national security — to press companies to reshore production and to push for lower U.S. drug prices. The administration is also using Section 301 of the Trade Act to investigate drug costs as part of efforts to pressure other countries on pricing.
