WASHINGTON (TNND) — The United Kingdom agreed to pay more for prescription drugs in a trade deal announced with the U.S. on Monday that will exempt its pharmaceuticals from steep tariffs in a move the White House says will help lower drug costs for Americans.
The deal was a step forward for the administration to deal with what it says is a problem with other wealthy nations not paying enough for medications that have ramped up costs for Americans through higher insurance premiums and burden on taxpayers.
“For too long, American patients have been forced to subsidize prescription drugs and biologics in other developed countries by paying a significant premium for the same products in ours,” U.S. trade representative Jamieson Greer said in a release. “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.”
Under the deal, Britain will avoid potential tariffs on its drug exports. Trump has suggested he would impose tariffs on imported drugs for months but has not yet followed through as the administration has made exemptions in trade deals and for companies that agreed to increase manufacturing within the U.S. or cooperated in talks with the White House to lower prices.
The administration also said it would pursue similar deals with other countries that have not yet locked in trade agreements with the U.S. to correct a longstanding gripe Trump has had with wealthy European nations that he says pay too little for medicines, forcing those costs on the United States.
“The Trump Administration is reviewing the pharmaceutical pricing practices of many other U.S. trading partners and hopes that they will follow suit with constructive negotiations,” Greer said.
It’s unclear what appetite other countries will have to pay more for drugs to avoid steeper tariffs from the U.S. Most countries have tried to avoid getting into a bruising trade war after Trump unveiled his package of tariffs earlier this year and worked with the administration to keep import taxes as low as possible. European Union pharmaceuticals were exempted from a blanket tariff rate under previous talks.
Trump has tried to tie U.S. prices to what other countries pay, as the U.S. pays three times as much for brand-name drugs. Some countries in Europe, including the U.K., use complicated formulas to determine whether to cover a drug will be covered by the government and refuse to pay for a treatment based on the calculations.
The National Institute for Health and Care Excellence, Britain’s public body that makes the calculations, has not moved its thresholds for most drugs in more than two decades despite pressure from companies to increase them.
Getting other wealthy nations to increase what they pay for drugs has been part of the administration’s push to decrease costs domestically and protect drugmakers’ revenues that help spur investments in research for new treatments. But some experts have cautioned that increased prices in Europe may not lead to lower ones in the U.S.
The administration has also pressured drug companies to voluntarily lower prices in the U.S. or risk facing consequences with the federal government. Earlier this year, Trump sent letters to major drug company CEOs asking them to provide “most favored nation” pricing to all drugs for Medicaid recipients and asked for guarantees Medicaid, Medicare and commercial insurers pay the same prices for “all new drugs.”
“If you refuse to step up, we will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices,” Trump wrote in the letters.
A handful of companies have struck confidential deals with the administration agreeing to the “most favored nation” policy on prices for Medicare and Medicaid plans in exchange for tariff relief. The administration has announced deals with Novo Nordisk and Eli Lilly to sell their popular GLP-1 weight loss drugs at a discounted rate, and AstraZeneca has pledged to sell drugs to Medicaid at the same rate as the lowest price charged in other countries, along with listing its products on the direct-to-consumer TrumpRx website.
The pharmaceutical industry has intensely lobbied against policies trying to tie prices charged in America to what costs are overseas but has been supportive of the administration’s attempts to get other wealthy nations to pay more for medicines. Industry groups have blamed pharmacy benefit managers and hospital markups for the ballooning cost of medications in the U.S.