Authored by Lawrence Wilson via The Epoch Times,

The UK’s National Health Service will pay 25 percent more for new, patented U.S. medicines under the terms of a new trade agreement between the two nations.

The deal is the latest in a series of agreements in which the United States has leveraged tariffs to secure concessions on prescription drug prices. This is the first deal reached with a nation rather than with pharmaceutical manufacturers.

In return for this concession, the United States will forego tariffs on UK-made pharmaceuticals, pharmaceutical ingredients, and medical technology, as well as refrain from further pharmaceutical price negotiations during U.S. President Donald Trump’s term.

The commitments arose from the U.S.–UK Economic Prosperity Deal, signed in June, in which British Prime Minister Keir Starmer and Trump agreed to address the imbalance of pharmaceutical trade between the two nations.

The UK also agreed to not undercut the new, higher prices by demanding concessions from manufacturers under a previous discount agreement with the pharmaceutical industry.

U.S. Secretary of Commerce Howard Lutnick said the agreement would strengthen the U.S. supply chain and cement America’s place as a leader in life sciences innovation.

“This deal doesn’t just deepen our economic partnership with the United Kingdom—it ensures that the breakthroughs of tomorrow will be built, tested, and produced on American soil,” Lutnick said in a Dec. 1 statement announcing the terms of the agreement.

U.S. Health and Human Services Secretary Robert F. Kennedy Jr. said the agreement will bring “long-overdue balance” to U.S.–UK pharmaceutical trade and strengthen global innovation.

UK Officials Hail Deal

The UK government said in a Dec. 1 statement that the agreement would benefit tens of thousands of patients and expand access to vital drugs.

Liz Kendall, UK secretary of state for science, innovation, and technology, said the agreement “will ensure UK patients get the cutting-edge medicines they need sooner, and ... world-leading UK firms keep developing the treatments that can change lives.”

Health Minister Zubir Ahmed said: “This represents new hope and the possibility of treatments that could transform and even save lives.

“This package of changes will bring the best of pharma to the UK for the benefit of our patients, our [National Health Service] and our economy.”

The 25 percent price increase is accompanied by an equivalent rise in the cost-benefit calculation that the UK’s National Institute for Health and Care Excellence uses to decide whether to provide a particular drug to a patient. The move appears aimed at ensuring that medicines remain available to patients despite the additional cost to taxpayers.

“Today’s announcement is an important step to ensure that patients can access innovations as quickly as possible,” said Nicola Perrin, chief executive of the Association of Medical Research Charities.

Active Ingredient Imports

The development and manufacture of medications is a global industry, and active pharmaceutical ingredients (APIs) and other components of a drug are often sourced outside the United States.

Just 15 percent of the APIs for brand-name medications sold in the United States are produced domestically, according to U.S. Pharmacopeia, a global supply chain research group. The European Union is the largest supplier of such ingredients to U.S. manufacturers, accounting for 43 percent of the supply. More than half of the APIs for prescription medicines in the United States are made in India and the EU.

The Trump administration imposed a 15 percent tariff in August on pharmaceuticals and pharmaceutical ingredients imported from Europe.

That tariff is waived for the UK under the terms of the agreement announced on Dec. 1.

Most Favored Nation Plan

Trump had long said that other countries have been taking advantage of the United States by negotiating low prices for pharmaceuticals through their national health plans, driving manufacturers to raise prices for U.S. customers.

“The United States has less than five percent of the world’s population and yet funds around three-quarters of global pharmaceutical profits,” Trump said in an executive order in May.

“This egregious imbalance is orchestrated through a purposeful scheme in which drug manufacturers deeply discount their products to access foreign markets, and subsidize that decrease through enormously high prices in the United States.”

The administration initiated a most favored nation prescription drug pricing policy, which refers to the lowest price available in any developed nation.

In combination with tariffs imposed on imported medications and trade negotiations with other nations, the administration has entered drug price agreements with drugmakers Eli Lilly, Novo Nordisk, EMD Serono, and AstraZeneca over the past three months.

The drug makers agreed to offer their products to the Medicaid program at the most favored nation price and to offer all new medications within the United States at the most favored nation price.

The manufacturers also agreed to sell some medications directly to U.S. consumers at the most favored nation price and to invest in the United States any additional revenue received from increasing prices in other countries.

Each company received a waiver on tariffs on imported pharmaceutical products in exchange for its commitment to honor the four points of Trump’s most favored nation prescription drug pricing plan.

These manufacturers and some others have pledged to participate in TrumpRx.gov, a clearinghouse site that will help private customers find low-priced medications for direct purchase.

Commenting on the UK deal, Chris Klomp, director of Medicare and deputy administrator of the U.S. Centers for Medicare and Medicaid Services, said, “When nations fairly share the burden of producing and paying for life-saving medicines, every citizen gains, and the fight against global disease becomes one we can actually win together.”