What You Need to Know 

The United States (U.S.) and United Kingdom (U.K.) announced a U.S.-U.K. Economic Prosperity Deal (EPD) on Dec. 1 to maintain zero tariffs on U.K.-origin pharmaceuticals, active ingredients, and medical technology for at least three years. This eliminates the risk of import duties and supports cost stability for health plans. Additionally, the U.K. is implementing changes to pricing and access that may accelerate the availability of innovative therapies. The U.S. Supreme Court is also reviewing reciprocal tariff agreements, which could influence future trade policy. 

Overview 

Following our September communication on U.S. pharmaceutical tariffs, we want to share an important update: 

• Zero tariffs secured - The U.S. and U.K. have agreed to maintain 0% tariffs on U.K.-origin pharmaceuticals, active pharmaceutical ingredients (APIs), and medical technology for a minimum of three years. This commitment eliminates the immediate risk of import duties on these products. By securing zero tariffs, both governments aim to preserve uninterrupted supply chains and ensure predictable pricing for therapies sourced from the U.K. 

• Pricing & access changes in the U.K. - In parallel with the tariff agreement, the U.K. announced several policy changes designed to accelerate patient access to innovative medicines: 

• Higher cost-effectiveness threshold: The National Institute for Health and Care Excellence (NICE) will increase its cost-effectiveness threshold by 25%, allowing more therapies, particularly high-cost, breakthrough treatments—to meet approval criteria. This change is expected to shorten timelines for market entry and broaden access to advanced therapies. 

• Expanded NHS budget for medicines: The National Health Service (NHS) will allocate additional funding for new medicines, signaling a commitment to faster adoption of innovative treatments. 

• Lower rebate rates: Under the Voluntary Scheme for Branded Medicines Pricing and Access, manufacturer rebate rates will be capped at 15% starting in 2026, down from the current 23.5%. This reduction is intended to improve predictability for pharmaceutical companies and encourage investment in the U.K. market. 

Additional Trade Developments 

Last month, President Donald Trump struck a trade agreement with Switzerland and Liechtenstein that caps pharmaceutical tariffs at 15%. This tariff rate on drugs imported from both countries to the U.S. aligns with Trump’s earlier trade deal in late July with the European Union (EU). These agreements reflect a broader trend toward negotiated tariff caps across multiple markets, reinforcing the importance of monitoring global trade policy for potential downstream impacts. 

Supreme Court Review 

The U.S. Supreme Court is currently reviewing the legality of reciprocal tariff agreements. While this review does not directly impact existing trade arrangements for pharmaceuticals, some prior agreements capping pharma tariffs were structured as reciprocal tariffs. Depending on the Court’s decision, there could be implications for future trade negotiations or enforcement of existing agreements. 

Key Highlights from Previous Communication in September: 

• Generic drugs remain excluded from tariffs. 

• APIs, intermediates, and raw materials used in drug production are also excluded. 

• Companies actively building U.S. based manufacturing facilities may be exempt from tariffs. 

• Note: No official executive order or formal guidance has been issued yet; additional details may emerge as the administration clarifies its policy. 

Prime’s Position 

Prime supports measures that promote cost stability and improved access to innovative therapies. We will continue to monitor developments—including the Supreme Court review—and provide scenario planning and impact analysis to help you navigate potential changes. 

Questions 

Reach out to your Prime account team representative or client communications.