Listen to this articleThe basics:
- US–UK deal raises United Kingdom payments for innovative medicines by 25%
- VPAG repayment rates fall to 15% starting in 2026
- US grants tariff exemptions, limits future pricing actions
- NJ life sciences leaders say the agreement supports innovation and investment
The United States and the United Kingdom reached an agreement in principle on pharmaceutical pricing. The update comes as part of the U.S.–U.K. Economic Prosperity Deal (EPD), announced Dec. 1.
The Trump administration says the agreement aims to correct what U.S. officials describe as long-standing imbalances in pharmaceutical trade. The EPD will raise U.K. payments for innovative medicines as well as secure continued pharmaceutical investment in the United States.
Under the deal, the United Kingdom will reverse the decade-long trend of declining National Health Service (NHS) expenditures on innovative, life-saving medicines and boost the net price it pays for new medicines by 25%.
The U.K. also committed to preventing the undercutting of price increases by broad rebate demands. The country pledged that repayment rates under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) will fall to 15% in 2026. It also said they would remain at or below that threshold for the life of the program.
On the U.S. side, the agreement includes several incentives for the U.K., such as exemptions from Section 232 tariffs for U.K.-origin pharmaceuticals, ingredients and medical technology. The United States also pledged not to target U.K. pharmaceutical pricing in any future Section 301 investigation for the remainder of President Donald Trump’s term. It will also work to ensure that U.K. citizens have access to the latest pharmaceutical breakthroughs.
Investment, innovation push
Ambassador Jameson Greer lauded Trump. Greer said he is the first American president to work with U.S. trading partners “to ensure fair payment internationally for innovative pharmaceuticals and pharmaceutical ingredients.”
“For too long, American patients have been forced to subsidize prescription drugs and biologics in other developed countries by paying a significant premium for the same products in ours,” said Greer. “Today, the United States and the United Kingdom announce this negotiated outcome pricing for innovative pharmaceuticals, which will help drive investment and innovation in both countries.
“The Trump administration is reviewing the pharmaceutical pricing practices of many other U.S. trading partners and hopes that they will follow suit with constructive negotiations.”
“Today’s agreement is a major win for American workers and our innovation economy. We are strengthening supply chains, creating high-quality jobs, and reinforcing America as the world’s premier hub for life-sciences investment,” said Secretary of Commerce Howard Lutnick. “This deal doesn’t just deepen our economic partnership with the United Kingdom—it ensures that the breakthroughs of tomorrow will be built, tested, and produced on American soil.”
Today’s agreement is a major win for American workers and our innovation economy. We are strengthening supply chains, creating high-quality jobs, and reinforcing America as the world’s premier hub for life-sciences investment.
– Howard Lutnick, U.S. secretary of commerce
Chris Klomp, director of Medicare and deputy administrator of the Centers for Medicare & Medicaid Services, served as a lead negotiator. He said that the agreement comes less than two months after Trump announced the first results of his most-favored-nation (MFN) pharmaceutical drug pricing policy.
“And underscores his determination to bring down drug prices for the American people,” said Klomp. “When nations fairly share the burden of producing and paying for life-saving medicines, every citizen gains, and the fight against global disease becomes one we can actually win together.”
Shared success
Here in New Jersey, sector leaders applauded the agreement.
Today’s announcement brings American patients one step closer to a more equitable system…
– Chrissy Buteas, president and CEO, HealthCare Institute of NJ
“BioNJ is pleased to see an announced agreement between the United States and the United Kingdom, intended to ensure that innovation progresses across both ecosystems,” BioNJ said in a statement. “While we look forward to the details of this deal, an accurate accounting of the value that therapeutics bring to Patients is central to enabling a thriving life sciences innovation ecosystem and to ensuring that Patients will be able to access that innovation.
“Existing UK regulations stifle innovation and curtail investments in R&D, and we applaud the concrete steps taken toward reversing that trend so that the life sciences industry can continue delivering for Patients.”
Chrissy Buteas, president and CEO of the HealthCare Institute of New Jersey, said in a statement:
“For generations, America has led the world in discovering new treatments and cures for humanity’s most dreaded diseases, but for far too long other countries haven’t paid their fair share of those life-saving medical advances. Today’s announcement brings American patients one step closer to a more equitable system where other countries help shoulder the extraordinary costs and risks of finding these new treatments and cures, many of which are discovered and manufactured right here in New Jersey.”
