UK pharma. Credit: Ajale, Pixabay.
The US is preparing to exempt UK-made pharmaceuticals, ingredients and medical technology from new tariffs. The government says the move makes the UK the only country in the world to have secured a zero per cent tariff on pharmaceutical exports to the United States, protecting more than £5 billion in UK trade and strengthening Britain’s position as a life sciences leader.
The move also carries major implications for Ireland, home to many US pharmaceutical giants and currently subject to tariffs of up to 15 per cent on EU-manufactured medicines entering the US. Ireland is one of the world’s largest exporters of pharmaceuticals to America, with roughly 80 per cent of its US-bound goods exports made up of medicines.
The British government is preparing NHS pricing reforms – including higher cost-effectiveness thresholds at NICE and reduced industry rebates – that are closely linked to securing Washington’s support for the tariff exemption. These changes have not yet been finalised but represent a substantial shift in UK medicines policy.
What the US–UK exemption includes
The draft agreement would apply zero tariffs to:
- Finished UK pharmaceuticals
• Active pharmaceutical ingredients (APIs)
• UK-origin medical technologies
The Department for Business and Trade said the deal “guarantees that UK pharmaceutical exports – worth at least £5 billion a year – will enter the US tariff free.” The exemption has been confirmed by the US for at least three years, the lowest rate offered to any country under its Most Favoured Nation drug-pricing initiative.
The government says the deal will support thousands of skilled UK jobs, attract investment from major firms such as Moderna, Bristol Myers Squibb and BioNTech, and reinforce Britain’s ambition to become Europe’s leading life-sciences economy by 2030.
NHS drug pricing reforms: what is expected to change
The UK is expected to increase the net prices the NHS pays for new medicines by around 25 per cent. These changes include:
- A planned rise in NICE’s cost-effectiveness threshold, historically £20,000–£30,000 per QALY
• A reduction in VPAG rebate rates from 23–35 per cent to roughly 15 per cent
• An increase in the share of the NHS budget allocated to medicines, from around 9.5 per cent to approximately 12 per cent
These reforms remain in principle and have not yet been legally enacted.
Ireland: the wider impact of the UK’s tariff advantage
Ireland stands at the centre of US pharmaceutical investment:
- More than 90 pharmaceutical companies operate there, including major US groups such as Pfizer, AbbVie, Merck and Johnson & Johnson.
• In 2024, Ireland exported €73 billion in goods to the US, roughly 80 per cent of which were pharmaceuticals.
• Ireland accounts for around a fifth of total US pharmaceutical imports.
Unlike the UK’s proposed zero-tariff regime, Irish and other EU medicines entering the US face tariffs of up to 15 per cent under recent US–EU arrangements.
Analysts at ING estimate that these tariffs could reduce Irish pharma exports to the US by €8.7 billion annually.
The US must finalise the exemption through formal tariff processes. In the UK, the government is expected to publish updated NHS pricing frameworks in the near future.
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