WASHINGTON, D.C. — President Donald Trump and British Prime Minister Keir Starmer have reached an agreement in principle on pharmaceutical pricing that U.S. officials say could reshape the global drug market, boost American manufacturing, and ease what they describe as a long-standing imbalance that left U.S. patients paying more for life-saving medicines.
The agreement, announced jointly by the Department of Commerce, the Office of the United States Trade Representative, and the Department of Health and Human Services, is part of the new U.S.-U.K. Economic Prosperity Deal. It focuses on changing how the United Kingdom prices innovative pharmaceuticals while securing continued and expanded investment by British drugmakers in the United States.
Under the framework, the United Kingdom has agreed to reverse a decade-long decline in National Health Service spending on innovative medicines and raise the net prices it pays for new drugs by 25%. British officials also committed to limiting the impact of rebate schemes that U.S. negotiators say have historically driven down effective prices and discouraged investment.
Specifically, the United Kingdom will lower the repayment rate owed by pharmaceutical companies under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth to 15% in 2026 and hold it at or below that level for the duration of the program. U.S. officials said the change is intended to provide greater certainty for companies developing and launching new therapies.
Commerce Secretary Howard Lutnick described the agreement as a boost for U.S. workers and domestic innovation, saying it strengthens supply chains, supports high-quality jobs, and reinforces the United States as the world’s leading hub for pharmaceutical research, development, and manufacturing.
U.S. Trade Representative Jamieson Greer said the deal marks the first time a U.S. president has successfully pressed a major trading partner to pay more equitable prices for innovative medicines, arguing that American patients have long subsidized lower drug costs abroad by paying higher prices at home.
The agreement follows Trump’s rollout of a most-favored-nation pharmaceutical pricing policy earlier this year, which aims to link U.S. drug prices more closely to what other developed countries pay. Federal health officials said the U.S.-U.K. deal reflects that approach by encouraging other nations to share more of the cost of developing and producing new medicines.
In exchange for the United Kingdom’s commitments, the United States agreed to exempt U.K.-origin pharmaceuticals, pharmaceutical ingredients, and medical technology from Section 232 tariffs and pledged not to target U.K. drug pricing practices in any future Section 301 trade investigation during Trump’s current term. U.S. officials also said they will work to ensure British patients have access to the latest pharmaceutical innovations.
Health and Human Services Secretary Robert F. Kennedy, Jr. said the agreement helps rebalance pharmaceutical trade and supports innovation without forcing American consumers to shoulder disproportionate costs. Medicare official Chris Klomp, a lead negotiator, said the deal shows that when countries share the burden of paying for medicines, both patients and innovation benefit.
While the agreement is still being finalized, administration officials said it could serve as a model for negotiations with other U.S. trading partners as Washington pushes for broader changes in how life-saving drugs are priced and paid for around the world.
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