Britain and America have established a major commercial pact that will ensure zero tariffs on UK pharmaceutical shipments going into the US market.
The Terms of the Deal
As part of the deal, the UK has committed to increase spending on medicines through the National Health Service (NHS). This move secures that import taxes on these key exports will stay at nothing for a duration of the next three years.
This agreement follows recent warnings to dramatically increase import taxes on patented drug products, with potential rates discussed as high as double the cost.
"This deal with the United Kingdom bolsters the international landscape for new treatments and establishes much-needed balance to American-British drug exports," a statement noted.
Economic Impact
Pharmaceuticals represent one of the UK's largest exports to the United States, which is by far the largest buyer for large UK drugmakers.
Export figures indicate that in the one-year period leading up to last September, the UK sold drugs worth billions to the US. This figure made up 17.4% of total UK exports in that timeframe.
"This deal secures work, stimulates investment and facilitates the UK to emerge as a global hub for life sciences," the Business and Trade Secretary stated.
Detailed UK Commitments
The deal involves several specific changes from the British government:
- Price Threshold Increase: The UK will increase the affordability limit at which it judges new treatments to be too expensive by a quarter.
- Increased NHS Spending: There is a aim to increase total NHS spending on treatments from 0.3 percent of the national economy to 0.6 percent over the following ten-year period.
- Refund Ceiling: The percentage pharmaceutical firms must return to the NHS to prevent overspending will be limited at fifteen percent. In the past, refunds topped twenty percent.
Recent Tensions
This agreement comes amid a protracted tension between the pharmaceutical industry and the ministers over drug pricing and regulatory access.
The disagreement were intensified by claims that US customers were charged several times more for the identical medicines than consumers in the other developed nations.
Over the last 18 months, several major manufacturing plans in the UK have been delayed or abandoned, while major expansions have been directed toward US facilities.
One official acknowledged that the NHS had to spend more on medicines, noting that its budget allocation on drugs had shrunk as a share of its overall budget over the last ten years.
