The UK and US have concluded a landmark bilateral deal that will guarantee zero duties on British pharmaceutical shipments being sold in the US market.
Key Provisions of the Deal
In exchange for the tariff guarantee, the UK has pledged to raise spending on drugs through the NHS. This move ensures that import taxes on these crucial products will stay at zero for a duration of three years.
This deal is in response to previous warnings to hike import taxes on patented drug products, with increases discussed up to one hundred percent.
"This agreement between the Britain bolsters the worldwide climate for innovative medicines and introduces much-needed fairness to American-British medicine commerce," a statement noted.
Economic Importance
Medicines constitute one of the the United Kingdom's largest goods shipped to the US, which is by far the primary buyer for large UK drugmakers.
Export figures show that in the year prior to last September, the UK exported pharmaceutical products worth £11.1bn to the US. This figure represented 17.4% of all goods exports in that span.
"This guarantee protects employment, boosts investment and paves the way for the UK to emerge as a international leader for medical research," the Business and Trade Secretary remarked.
Specific NHS Changes
The pact involves several notable pledges from the UK:
- Higher Cost Ceiling: The UK will increase the price threshold at which it deems new treatments to be too expensive by 25%.
- Increased NHS Spending: There is a aim to increase total public funding on drugs from 0.3 percent of GDP to 0.6% over the next decade.
- Rebate Cap: The amount drug companies must return to the NHS to prevent overspending will be capped at 15%. Previously, rebates topped 20%.
Industry Background
This agreement comes amid a ongoing row between the drug companies and the UK government over spending levels and approval rates.
The disagreement were exacerbated by claims that American patients were paying a premium for the identical medicines than consumers in the Britain and the EU.
Recently, several significant drug company projects in the UK have been halted or abandoned, while major expansions have been announced toward projects in the United States.
One official acknowledged that the NHS needed to invest a greater share on drugs, noting that its budget allocation on drugs had declined as a percentage of its total funding over the previous ten-year period.
