The United States has eliminated tariffs on British pharmaceuticals in a landmark deal that sees the United Kingdom commit to spending 25% more on new treatments from American drug companies. The agreement, announced Monday, makes the UK the only country to secure a zero-tariff rate on medicines imported into the US, resolving a major trade dispute.

This deal is designed to correct what Washington has long seen as a trade imbalance, where American patients effectively subsidize the cost of prescription drugs for other developed nations. "For too long, American patients have been forced to subsidise prescription drugs and biologics in other developed countries," noted US Trade Ambassador Jamieson Greer.

Implications for Kenya's Health Sector

While the pact directly involves the US and UK, it sets a powerful precedent for how the world's largest economy may negotiate with other nations on the sensitive issue of drug pricing. For Kenya, which imported approximately $27 million (approx. KES 3.5 billion) in pharmaceutical products from the US in 2023, such shifts in global trade policy warrant close attention. Kenyan households already face high costs for medicine, with one report finding prices can be several times higher than international benchmarks.

The deal could influence future trade discussions and the pricing models for crucial imported medicines. Kenya primarily imports pharmaceuticals from India and China, but the UK and US remain important sources of specialised medications.

The Heart of the Agreement

The core mechanics of the deal involve significant commitments from both sides, effective for at least the next three years. Key provisions include:

• The US will exempt UK-made medicines, drug ingredients, and medical technology from so-called Section 232 tariffs.
• Britain's state-funded National Health Service (NHS) will increase the net price it pays for new innovative medicines by 25%.
• The UK will also adjust its cost-effectiveness thresholds, allowing its health system to approve a wider range of new, and often more expensive, treatments.

The agreement was finalised between the administrations of US President Donald Trump and British Prime Minister Keir Starmer. British officials celebrated the deal as a move that protects UK jobs and secures access to cutting-edge medicines for NHS patients. The deal is expected to unlock further investment, with pharmaceutical giant Bristol Myers Squibb announcing it could invest over $500 million (approx. KES 65 billion) in the UK over the next five years as a result.

Analysts will now watch closely to see if the Trump administration uses this framework to pressure other trading partners for similar concessions. As Ambassador Greer stated, the administration is "reviewing the pharmaceutical pricing practices of many other U.S. trading partners and hopes that they will follow suit."