The UK and US have announced a significant commercial pact that will maintain zero tariffs on British medicine exports going into the US market.
Agreement Details of the Deal
As part of the deal, the UK has agreed to increase spending on medicines through the public health system. This commitment ensures that duties on these vital goods will stay at zero for a duration of 36 months.
This deal comes after recent statements to hike import taxes on branded pharmaceutical imports, with potential rates discussed up to double the cost.
"This arrangement with the UK bolsters the worldwide climate for innovative medicines and introduces long-overdue equity to U.S.–U.K. drug exports," a statement noted.
Trade Significance
Pharmaceuticals constitute one of the Britain's biggest goods shipped to the US, which is easily the biggest buyer for leading UK drugmakers.
Statistics indicate that in the 12 months leading up to September, the UK exported pharmaceutical products worth £11.1bn to the US. This value made up nearly one-fifth of total UK exports in that period.
"This deal safeguards employment, boosts funding and facilitates the UK to emerge as a international leader for medical research," a minister remarked.
Detailed UK Commitments
The pact entails several key changes from the British government:
- Revised Affordability Limit: The UK will raise the price threshold at which it deems new therapies to be too expensive by 25%.
- Higher Drug Budget: There is a aim to double total public funding on drugs from 0.3 percent of GDP to 0.6 percent over the next decade.
- Rebate Cap: The percentage drug companies must return to the NHS to stay within budget will be capped at fifteen percent. Last year, refunds were more than twenty percent.
Industry Background
The pact comes amid a protracted tension between the drug companies and the UK government over drug pricing and NHS adoption.
These tensions were heightened by arguments that US patients were charged significantly more for the equivalent treatments than consumers in the Britain and the EU.
Over the last 18 months, several significant drug company projects in the UK have been delayed or cancelled, while substantial funding commitments have been announced toward American operations.
A senior figure publicly accepted that the NHS needed to invest a greater share on medicines, noting that its budget allocation on drugs had decreased as a proportion of its total funding over the previous ten-year period.
