The spending increase will stay in place for at least the next three years.

The United States has announced a new trade deal with the United Kingdom that includes zero tariffs on pharmaceutical and medical products in exchange for the UK spending more on medicines, the first significant spending increase in more than 20 years, and overhauling how it values drugs.

As part of the deal announced on Monday, the state-run National Health Service (NHS) will spend 25 percent more on treatments for at least the next three years.

“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,” US Trade Representative Jamieson Greer said in a statement.

The USTR statement said the UK would increase the net price it pays for new medicines by 25 percent under the deal. In exchange, UK-made medicines, drug ingredients and medical technology would be exempted from so-called Section 232 sectoral tariffs and any future Section 301 country tariffs.

Two sources familiar with the deal said it involved a major change in the value appraisal framework at the National Institute for Health and Care Excellence (NICE), a UK government body that determines whether new drugs are cost-effective for the NHS, the sources said.

NICE’s “quality-adjusted life year” measures the cost of a treatment for each healthy year it enables for a patient, with the upper threshold being 30,000 pounds ($39,789) per year.

US President Donald Trump has pressed the UK and the rest of Europe to pay more for US medicines, part of his push for their costs to be brought more in line with those paid in other wealthy nations.

The pharmaceutical industry has criticised a tough operating environment in the UK, and some big firms have cancelled or paused investment in the UK, including AstraZeneca, the largest on the London Stock Exchange by market value.

One point of contention between the sector and the government has been the operation of a voluntary pricing scheme, which sees firms put a proportion of sales to the NHS back into the health service.

The office of the USTR said the UK had committed that the rebate rate would decrease to 15 percent in 2026.

‘Cutting-edge medicines’

British science and technology minister, Liz Kendall, said on Monday a new pharmaceutical deal with the US will encourage life sciences companies to continue investing and innovating in the UK.

“This vital deal will ensure UK patients get the cutting-edge medicines they need sooner, and our world-leading UK firms keep developing the treatments that can change lives,” Kendall said in a statement.

“It will also enable and incentivise life sciences companies to continue to invest and innovate right here in the UK,” Kendall added.

Among those companies is Bristol Myers Squibb. The pharmaceutical giant’s CEO said it will be able to invest more than $500m over the next five years because of the deal.

On Wall Street, the stock, which is traded under the ticker symbol BMY, is down by 0.1 percent. Other heavily affected pharmaceutical companies include AstraZeneca, which was down by about 1 percent, and GSK, down by 0.4 percent.