The United States announced an agreement with Britain on Monday for zero tariffs on pharmaceuticals and medical technologies, Reuters reports.
The deal included an increase in the percentage of the state-run National Health Service (NHS) budget spent on drugs.
"The United States and the United Kingdom are announcing this agreed pricing for innovative pharmaceuticals, which will help stimulate investment and innovation in both countries," U.S. Trade Representative Jamieson Greer said in a statement.
A statement from the USTR office said Britain would increase the net price, which pays for new drugs, by 25% under the agreement. In return, medicines, drug ingredients and medical technologies made in the UK will be exempt from so-called Section 232 sector tariffs.
Two sources familiar with the deal said it involves a major change to the value assessment framework at NICE, the British government body that determines whether new drugs are cost-effective for the NHS, the sources said.
NICE measures the cost of treatment for each healthy year it provides a patient, with an upper limit of 30,000 pounds ($39,789) a year.
US President Donald Trump has been pressuring Britain and the rest of Europe to pay more for US drugs, part of his drive to bring US drug prices more in line with those paid in other rich countries.
The pharmaceutical industry has criticised the difficult operating environment in Britain, and some major firms have cancelled or suspended investments in Britain, including AstraZeneca, the largest company on the London Stock Exchange by market value.
One of the points of contention between the industry and the government is the operation of a voluntary pricing scheme, in which companies return a portion of their NHS sales back to the health service.
The USTR office said the UK had committed that the rebate rate would be reduced to 15% by 2026.