The United States and Britain have announced a deal to secure zero tariffs on British pharmaceutical products and medical technology in return for Britain spending more on medicines and overhauling how it values drugs.
Under the agreement, Britain will raise the net price it pays for new US medicines by 25%.
In return, UK-made medicines, drug ingredients and medical technology will be exempt from Section 232 sectoral tariffs and any future Section 301 country tariffs.
"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," United States Trade Representative Jamieson Greer said in a statement.
The agreement means Britain will be exempted from hefty US tariffs imposed on pharma imports that went into effect on 1 October.
The deal includes a significant change to the value appraisal framework at NICE, which is the UK body that determines whether new drugs are cost-effective for the NHS.
NICE's "quality-adjusted life year" threshold, currently £30,000 per year, will rise to £35,000.
The British government said the change to NICE would let it "keep pace with the commercial and economic environment in which pharmaceutical companies are operating in today."
The revised framework will apply to all new medicines, not just US drugs, but will not affect prices of existing treatments.
NICE has often rejected coverage of new, expensive drugs through the NHS, for example Eli Lilly's Alzheimer's drug and AstraZeneca's breast cancer treatment Enhertu.
British pharmaceutical industry group ABPI said the deal would help British patients access new medicines and help attract investment from drugmakers.
Shares in UK-based drugmakers GSK and AstraZeneca were broadly unchanged on the agreement. The UK is a very small market for the pharmaceutical industry, making up just 2% of AstraZeneca's total revenue for instance.
GSK welcomed the deal, saying "these good foundations, offer a real opportunity to secure the UK as an attractive global-leading environment for life sciences that rewards long-term innovation."
US President Donald Trump has pressed Britain and the rest of Europe to pay more for American medicines, part of his push for US medicine costs to be brought more in line with those paid in other wealthy nations.
The industry has criticised a tough operating environment in Britain and some major firms have cancelled or paused investment in Britain, including AstraZeneca, the largest firm on the London Stock Exchange by market value.
One point of contention between the sector and the government has been the operation of a voluntary pricing scheme which sees firms put a proportion of sales to the NHS back into the health service.
The office of the USTR said Britain had committed that the rebate rate would decrease to 15% in 2026.
The breakthrough comes after the two countries agreed in May to seek "significantly preferential treatment outcomes on pharmaceuticals", with a commitment that Britain tries to improve the environment for pharma firms operating in the country.
It concludes talks on a major unresolved issue after Britain became the first country to secure tariff relief on some other sectors in May.
The European Union and US agreed a trade deal in July that capped tariffs on exports on pharmaceuticals, and most other goods, from the EU at 15%.
