The United Kingdom and the United States have reached a pharmaceutical trade agreement under which medicines produced in the UK will be exempt from US import tariffs for the next three years, offering a significant boost to the UK’s life sciences sector.

Under the deal, the UK’s National Health Service (NHS) has agreed to pay higher prices for certain medicines in exchange for Washington’s commitment to maintain zero tariffs on British drug exports. This marks the first increase in NHS drug purchasing costs in more than two decades.

The agreement follows repeated warnings from US President Donald Trump, who has threatened to impose tariffs of up to 100% on branded medicines. Such products represent one of the UK’s largest export categories to the US, raising concerns across the pharmaceutical industry.

UK Business and Trade Secretary Peter Kyle said the deal would secure at least £5 billion worth of UK pharmaceutical exports to the US each year at zero tariff rates, helping to protect jobs, stimulate investment and strengthen Britain’s position as a global life sciences hub.

According to official figures, the UK exported £11.1 billion worth of pharmaceuticals to the US in the 12 months to the end of September, accounting for 17.4% of total goods exports. While US tariff measures announced earlier this year did not include pharmaceuticals, the administration has consistently highlighted its desire to reduce reliance on overseas drug supplies and expand domestic production, keeping future trade policy under close watch.