In a notable departure from traditional treaty-based free trade agreements, the United Kingdom and the United States unveiled a unique pharmaceutical trade deal in December 2025. This arrangement forms a component of a broader UK–US Economic Prosperity Deal. Under the terms, the US Government has pledged not to impose tariffs on UK pharmaceutical and medical technology exports for a period of three years, commencing January 1, 2026, and extending until January 19, 2029.
This commitment from the US is contingent upon all major UK pharmaceutical companies adhering to the US Government’s Most Favoured Nation (MFN) policy and existing tariff agreements. In reciprocation, the UK Government has committed to bolstering its support for the life sciences industry and significantly increasing National Health Service (NHS) spending on new medicines. This spending is set to rise from 0.3% of GDP in 2026 to at least 0.6% by 2036.
Crucially, this agreement is characterized as a ‘preliminary understanding’ and a ‘flexible soft law instrument,’ rather than a treaty-based free trade agreement under international law. Consequently, it is not subject to parliamentary scrutiny under the Constitutional Reform and Governance Act 2010. This approach highlights an evolving landscape in international trade, where negotiations are increasingly occurring in bilateral or regional non-multilateral spaces, a shift from the traditional focus on the World Trade Organization (WTO). The deal underscores a trend where new provisions within trade agreements are emerging that lack direct precedent in WTO treaties, particularly in areas like public health.
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