On December 1st, the UK government made a significant change that affects the pharmacy industry. They agreed to a deal with the US that removes import taxes (tariffs) on medicines. This means UK-based pharmaceutical companies like GSK and AstraZeneca can now sell their products in the US without paying these extra fees. In contrast, companies from the EU and Switzerland still have to pay a 15% tax. While this is good news, the deal also includes other important changes that could greatly impact the UK’s economy and the pharmacy sector. One of the main issues addressed is the ‘clawback’ system used to control the cost of medicines in the National Health Service (NHS). This system, called the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG), can sometimes force companies to pay back a large portion of their revenue if the growth of NHS drug sales is too high. In 2025, this payback rate unexpectedly jumped to 22.9%, causing concern in the industry. The new deal caps this payback rate at 15% for the years 2026-2028, providing some relief. Additionally, the UK government has promised to increase the amount of money spent on new and innovative drugs over the next ten years. In return, the US has agreed not to target UK drug pricing practices under a strategy called the Most Favored Nation (MFN) strategy. The VPAG system has been used for many years to control the cost of NHS prescription medicines. Companies pay back a portion of their revenue if the growth of NHS drug sales is too high. In 2025, this payback rate increased significantly, causing problems for many companies. The Association of the British Pharmaceutical Industry (ABPI) has been working with the UK Department of Health and Social Care (DHSC) to find a solution. The new deal includes a cap on the payback rate and a promise to redesign the VPAG model to make it more predictable. Another important change is the increase in the cost-effectiveness threshold used by the National Institute for Health and Care Excellence (NICE) to evaluate new medicines for the NHS. This threshold, which has not changed in over 20 years, will now be increased by 25%. This means that more new medicines could be recommended for use in the NHS. The UK government and the ABPI have also promised to increase the amount of money spent on innovative drugs. These changes could help the UK pharmacy sector recover from a difficult year and restore its position as a priority market for new drugs. However, there are still questions about how the UK government and the NHS will afford these changes. This article is produced as part of GlobalData’s Price Intelligence service, which provides information and analysis on global pharmaceutical pricing and market access.