The United States and the United Kingdom reached a pharmaceutical pricing and trade agreement that raises NICE cost-effectiveness thresholds by 25% and eliminates tariffs on medicine imports between the two countries.
The UK committed to increasing NICE’s cost-effectiveness range from £20,000-30,000 per quality-adjusted life year (QALY) to £25,000-35,000, the first major increase in over two decades. The changes apply to new appraisals and those currently underway.
NICE estimates the higher thresholds will enable recommendations for 3-5 additional medicines or indications annually. Dr Samantha Roberts, NICE’s Chief Executive, stated: “In a health service funded by general taxation, it is right that the government decides on the level of health spending in the UK. The newly agreed thresholds aim to support the life sciences sector and broader economy.”
New Quality of Life Assessment Framework
The agreement includes the adoption of a new value set for measuring health-related quality of life, based on surveys of thousands of UK residents judging different health states. The value set will be introduced for use alongside EQ-5D-5L (a tool that measures health-related quality of life for health research and healthcare treatment decisions) following peer review and publication, potentially further improving average cost-effectiveness assessments for medicines.
VPAG Clawback Rate Drops to 15%
The UK committed to reducing the Voluntary Pricing and Access Scheme (VPAG) repayment rate to 15% in 2026, down from current levels, and maintaining it at or below that rate for the scheme’s duration. The Office of the US Trade Representative confirmed this commitment as part of the negotiated outcome.
Zero Tariff Status Through 2029
In exchange for the pricing concessions, the UK secured exemption from all pharmaceutical and medical technology tariffs to the United States. The USTR confirmed the UK will be exempt from potential Section 232 tariffs and will not be targeted in any Section 301 investigation through the end of President Trump’s term. Trump had previously threatened 100% tariff rates in a Truth Social post.
The UK becomes the only country with zero-tariff pharmaceutical access to the US market under these terms.
Industry Investment Response
Bristol Myers Squibb announced plans to invest upwards of $500 million in the UK over the next five years across research, development, and manufacturing operations. Chris Boerner, CEO and Chair, said: “This agreement is a sign of progress and one that creates an environment conducive to our continued presence in the UK.”
USTR Ambassador Jamieson Greer stated: “Today, 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. The Trump Administration is reviewing the pharmaceutical pricing practices of many other US trading partners and hopes that they will follow suit with constructive negotiations.”
The deal follows major pharma players pulling out of UK investments, including Merck’s decision earlier this year to abandon a £1 billion London research center, citing concerns about the UK’s post-Brexit attractiveness for life sciences investment. AstraZeneca also paused its entire £650m UK investment package in September 2025. The new agreement aims to reverse this trend by improving market access conditions.
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