Under the agreement the UK will pay more for medicines through the NHS in return for a guarantee that US import taxes on pharmaceuticals made in the UK will remain at zero for three years. The deal comes after US President Donald Trump threatened to raise tariffs to as high as 100% on branded drug imports. Pharmaceuticals are one of the UK's biggest exports to the US, which is also the biggest market by far for big UK drugmakers including GSK and AstraZeneca.

Earlier this year, US president Donald Trump announced massive increases to taxes on goods imported to the country, which he argued would create jobs and boost American manufacturing. The White House exempted pharmaceuticals from that round of tariffs, and later signed a deal with the UK to remove some trade barriers between the countries and reduce levies on most goods exported to the US to 10%. But pharmaceuticals remained a big unknown. The White House has repeatedly threatened to raise tariffs on medicines, citing concerns about the country's reliance on medicines made overseas. Trump has also argued that US consumers effectively subsidise medicines for other developed countries by paying premium prices for those drugs, pushing for other countries to pay more.

White House spokesman Kush Desai said the agreement with the UK was a "historic step towards ensuring that other developed countries finally pay their fair share". Under the terms set out on Monday, the UK will increase the price threshold at which it deems new treatments to be too expensive by 25%. The UK will also increase the overall amount the NHS spends on medicines, with a target to increase that spending from 0.3% of GDP to 0.6% of GDP over the next 10 years. The amount drug companies must pay back to the NHS to ensure the health system does not overspend its allocated budget will be capped at 15% - last year, drug companies had to pay back more than 20%. In exchange, UK medicine exports will be protected from tariff increases for the next three years. (BBC)