US to zero out tariffs on UK pharmaceuticals under trade deal
The US on Monday exempted British pharmaceuticals from import tariffs under a unique deal which sees the UK increase spending on American drugs by 25%.
The accord aims to ‘address long-standing imbalances in US-UK pharmaceutical trade,’ ending what US trade ambassador Jamieson Greer called an arrangement where ‘American patients have been forced to subsidise prescription drugs and biologics in other developed countries.’
Under the deal struck between the administrations of US President Donald Trump and British Prime Minister Keir Starmer, Britain’s publicly-funded National Health Service (NHS) will increase its prices for new US treatments by 25%.
The agreement means Britain will be exempted from hefty US tariffs imposed on pharma imports that entered force on October 1. It is the only country to reach such a deal.
The lofty price of medications has been a major political issue in the US for years, with a Rand Corp study showing Americans paid 2.5 times as much for pharmaceuticals as in France.
Prior to Monday’s announcement, the Trump administration had announced tariffs of 100% on branded pharmaceuticals.
At the same time, the White House delayed the tariffs for three years with Pfizer Inc and British group AstraZeneca PLC after both agreed to invest in US manufacturing capacity.
British Science & Technology Secretary Liz Kendall said the latest deal will ‘ensure UK patients get the cutting-edge medicines they need sooner,’ while also enabling ‘life sciences companies to continue to invest and innovate right here in the UK.’
The Trump administration said it ‘is reviewing the pharmaceutical pricing practices of many other US trading partners and hopes that they will follow suit with constructive negotiations’.
As it stands, the EU and Switzerland face pharma tariffs totalling 15%.
AstraZeneca in July announced plans to invest $50 billion by 2030 on boosting its US manufacturing and research operations.
Around the same time, British rival GSK PLC revealed it planned to invest $30 billion in the US over the next five years.
The UK government on Monday said it will ‘invest around 25% more in innovative, safe, and?effective treatments the first major increase in over two decades.’
It meant the NHS ‘will be able to approve medicines that deliver significant health improvements but might have previously? been declined ?purely?on cost-effectiveness?grounds.’
AstraZeneca and Merck & Co Inc recently axed plans for sizeable infrastructure investment in Britain, with the US pharma group citing UK drugs prices as a major reason for its U-turn.
Critics argue that high taxes and a lack of British government subsidies and investment are hindering foreign investment across various sectors.
Pfizer was down 1.4% in New York on Monday, while Merck & Co lost 2.4%.
AstraZeneca closed down 0.8% in London, while GSK rose 0.1%.
By Ben Perry with John Biers in New York
source: AFP
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