The UK and US have secured a key trade agreement that will keep zero tariffs on UK pharmaceutical products entering the US market.
Key Provisions of the Deal
As part of the deal, the UK has pledged to raise funding on drugs through the National Health Service (NHS). This commitment secures that import taxes on these key products will remain at nothing for a period of three years.
This deal comes after earlier threats to dramatically increase import taxes on patented drug imports, with figures mentioned up to double the cost.
"This deal between the United Kingdom reinforces the international landscape for new treatments and introduces much-needed fairness to U.S.–U.K. medicine commerce," a release declared.
Trade Impact
Medicines represent one of the the United Kingdom's largest goods shipped to the America, which is clearly the largest buyer for major companies like GSK and AstraZeneca.
Export figures reveal that in the year to the end of September, the UK exported medicines worth £11.1bn to the US. This figure accounted for nearly one-fifth of all goods exports in that period.
"This guarantee protects jobs, stimulates funding and sets the stage for the UK to establish itself as a worldwide center for medical research," a government official commented.
Key NHS Changes
The agreement entails several specific pledges from the British government:
- Higher Cost Ceiling: The UK will lift the price threshold at which it deems new treatments to be unaffordable by a quarter.
- Increased NHS Spending: There is a aim to raise overall NHS spending on medicines from 0.3% of the national economy to 0.6% over the following ten-year period.
- Rebate Cap: The amount drug companies must return to the NHS to stay within budget will be restricted at fifteen percent. Last year, rebates exceeded twenty percent.
Industry Background
The deal takes place against a protracted row between the drug companies and the ministers over drug pricing and regulatory access.
These tensions were exacerbated by arguments that US customers were charged significantly more for the same drugs than consumers in the other developed nations.
Recently, several significant drug company projects in the UK have been halted or cancelled, while substantial expansions have been pledged toward projects in the United States.
One official acknowledged that the NHS had to spend more on drugs, noting that its expenditure on drugs had declined as a proportion of its total funding over the past decade.
