The United Kingdom and the United States have forged a landmark commercial pact that will maintain zero tariffs on British medicine exports being sold in the US market.
Agreement Details of the Deal
Under the terms of the agreement, the UK has committed to increase expenditure on drugs through the NHS. This pledge secures that duties on these crucial products will remain at nothing for a period of 36 months.
This deal follows previous statements to dramatically increase import taxes on patented pharmaceutical products, with increases floated as high as 100%.
"This deal between the United Kingdom strengthens the worldwide climate for cutting-edge drugs and brings long-overdue balance to American-British medicine commerce," a release noted.
Commercial Significance
Medicines are one of the the United Kingdom's largest exports to the United States, which is by far the primary buyer for leading companies like GSK and AstraZeneca.
Trade data show that in the 12 months to the end of the third quarter, the UK shipped pharmaceutical products valued at billions to the US. This amount accounted for nearly one-fifth of all goods exports in that period.
"This deal protects employment, boosts capital expenditure and facilitates the UK to emerge as a international leader for biotech and pharma," the Business and Trade Secretary remarked.
Key UK Commitments
The agreement involves several notable commitments from the British government:
- Revised Affordability Limit: The UK will lift the price threshold at which it judges new treatments to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a aim to raise total public funding on medicines from 0.3 percent of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Refund Ceiling: The amount drug companies must refund to the NHS to control costs will be capped at fifteen percent. In the past, repayments topped twenty percent.
Industry Background
The pact takes place against a long-running tension between the sector and the British authorities over medicine costs and approval rates.
These tensions were exacerbated by claims that US consumers were paying significantly more for the identical medicines than consumers in the Britain and the EU.
Recently, several large drug company projects in the UK have been delayed or scrapped, while major funding commitments have been announced toward projects in the United States.
The Science Minister acknowledged that the NHS needed to increase expenditure on treatments, noting that its spending on drugs had shrunk as a percentage of its resources over the past decade.
