Under the agreement, the UK will raise the net price it pays for new US medicines by 25 per cent.
In return, UK-made medicines, drug ingredients and medical technology will be exempt from Section 232 sectoral tariffs and any future Section 301 country tariffs.
"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," United States Trade Representative Jamieson Greer said in a statement.
The deal includes a significant change to the value appraisal framework at NICE, the UK body that determines whether new drugs are cost-effective for the National Health Service (NHS).
NICE's "quality-adjusted life year" threshold, currently 30,000 pounds ($A60,600) per year, will rise to 35,000 pounds.
The UK government said the change to NICE would let it "keep pace with the commercial and economic environment in which pharmaceutical companies are operating in today".
The revised framework will apply to all new medicines, not just US drugs, but will not affect prices of existing treatments.
NICE has often rejected coverage of new, expensive drugs through the NHS, for example Eli Lilly's Alzheimer's drug and AstraZeneca's breast cancer treatment Enhertu.
British pharmaceutical industry group ABPI said the deal would help UK patients access new medicines and help attract investment from drug makers.
Shares in UK-based drugmakers GSK and AstraZeneca were broadly unchanged on the agreement.
The UK is a very small market for the pharmaceutical industry, making up just two per cent of AstraZeneca's total revenue for instance.
GSK welcomed the deal, saying "these good foundations, offer a real opportunity to secure the UK as an attractive global-leading environment for life sciences that rewards long-term innovation".
President Donald Trump has pressed the UK and the rest of Europe to pay more for US medicines, part of his push for US medicine costs to be brought more in line with those paid in other wealthy countries.
The British Chambers of Commerce welcomed the deal, saying "pharmaceuticals make up a fifth of all UK exports to the US by value, and the UK now has a deal which few others have achieved, giving us a distinct advantage".
The breakthrough comes after the two countries agreed in May to seek "significantly preferential treatment outcomes on pharmaceuticals," with a commitment that the UK tries to improve the environment for pharma firms operating in the country.
It concludes talks on a major unresolved issue after the UK became the first country to secure tariff relief on some other sectors in May.
Ryan Majerus, a partner with the King & Spalding law firm, said the US government was racing to complete as many detailed trade agreements as possible and refine previously agreed framework deals before the Supreme Court rules on a case that challenges the legality of Trump's tariffs imposed against nearly every country.
A decision by the highest US court is expected later this year or early next.
The US administration has already said it will use other legal authorities, including Section 232 of the 1962 Trade Expansion Act and Section 301 of the Trade Act of 1974 to replace tariffs that might be invalidated under a Supreme Court ruling.
