Updates Announced To The UK-US Trade Deal See Greater Support For The Pharmaceuticals Sector

The tariffs announced earlier this year by President Donald Trump on imports from all of the United States' (US) trading partners marked a significant change in trade dynamics. Having introduced a 10% baseline tariff on all UK goods entering the US, and higher rates for a range of countries, those most effected have been seeking to secure deals with the US to reduce the impact on their economies.

On 8 May the UK became the first to announce a significant trade deal with the US, providing greater stability for many of its exporting industries. With the initial focus being on reducing car export tariffs, removing the tariffs on UK steel and ethanol and providing reciprocal market access on beef, there have been lots of positive changes.

As further details come through, there is positive news for the UK pharmaceutical and life sciences sectors in a new deal on the trade of pharmaceutical products into the US. At the time of the original UK-US trade deal there had been concern over how tariffs might impact production costs, supply chain stability and R&D investment in pharmaceuticals – which was one of several areas where exceptions from the US tariffs agreed in May had been applied, pending further US investigation.

In light of this new announcement, we set out some of the key points for those working in the pharmaceuticals industry and what this means for its future trade with the US.

Key points arising from the announced deal:

• The deal – part of the UK-US Prosperity Deal – sees a zero percent tariff on pharmaceuticals to the US for three years, protecting UK-based manufacturing and allowing smoother trade and lowers costs for pharmaceutical companies exporting to the US. It marks the first time any country has secured such preferential terms for pharma exports to the US.
• The deal will also secure preferential terms for the UK's medtech exports, meaning no additional tariffs on medtech to unlock further investments in the UK.
• Alongside the deal, there is news that the National Institute for Health and Care Excellence (NICE) will raise the baseline threshold it uses to assess if medicines can be used by the NHS – this will be raised by 25%, moving from £20,000–£30,000 to £25,000–£35,000 per quality-adjusted life year (QALY), and applies to future appraisals and those already underway. The increase is intended to make the UK more attractive for innovative medicines and align more with the average figures internationally.
• The UK will also increase investment in new medicines, with a target to raise that spending from 0.3% of GDP to 0.6% of GDP over the next decade.
• As part of a broader strategy to support the life sciences sector the UK has committed to investing around 25% more in innovative, safe and effective treatments – marking the first major increase in this area in over two decades.
• Overall, the changes improve market access for UK pharmaceutical products and support the Government's wider ambitions for growth – as outlined in the UK's Modern Industrial Strategy there is an ambition to make the UK the leading life sciences economy in Europe by 2030 and the third most important life sciences economy globally.

These measures are designed to boost the competitiveness of the UK pharmaceutical sector and enhance its ability to export to the US market. According to the Association of the British Pharmaceutical Industry (ABPI), the UK exported £6.6 billion worth of medicinal and pharmaceutical products to the US in 2024, and so the measures put in place under this new agreement will help provide confidence and certainty for the industry in what is a key market supporting growth.

Adapting to a new trading landscape

The news of the zero percent tariff deal for pharmaceuticals exported from the UK to the US will be welcome news for the sector and its ambitions for growth as one of eight high growth sectors identified in the UK's Modern Industrial Strategy. It will provide confidence in the wider sector, strengthen supply chain resilience and boost investment in an industry that is a hub of innovation in the UK.

Importantly, it will also mean that more patients can receive medicines that are transforming treatments in a wide range of areas, ensuring broader access and reducing costs.

We are closely monitoring developments on this evolving topic. For more insight, visit our trades, tariffs and protectionism page for the latest insight from our legal experts – including a breakdown of the legal considerations following President Donald Trump's original announcement on tariffs on 2 April.

Read the original article on GowlingWLG.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.