The UK and US have secured a important trade agreement that will ensure no tariffs on UK drug products going into the US market.
The Terms of the Accord
Under the terms of the agreement, the UK has committed to increase funding on medicines through the National Health Service (NHS). This pledge guarantees that duties on these crucial goods will remain at nothing for a period of 36 months.
This deal follows earlier threats to dramatically increase import taxes on branded pharmaceutical products, with figures discussed up to double the cost.
"This agreement between the Britain reinforces the worldwide climate for new treatments and establishes much-needed balance to U.S.–U.K. drug exports," a statement noted.
Commercial Impact
Drugs constitute one of the Britain's biggest goods shipped to the United States, which is easily the largest destination for large companies like GSK and AstraZeneca.
Statistics reveal that in the one-year period to the end of the third quarter, the UK exported pharmaceutical products totaling £11.1bn to the US. This amount accounted for 17.4% of British export trade in that timeframe.
"This deal protects work, stimulates funding and sets the stage for the UK to emerge as a worldwide center for medical research," the Business and Trade Secretary commented.
Specific UK Commitments
The pact entails several key changes from the British government:
- Price Threshold Increase: The UK will lift the cost ceiling at which it deems new medicines to be too expensive by 25%.
- Boosted Medicine Funding: There is a target to increase total health service expenditure on drugs from 0.3% of the national economy to 0.6 percent over the coming ten years.
- Refund Ceiling: The amount manufacturers must return to the NHS to prevent overspending will be limited at 15%. Previously, rebates exceeded 20%.
Recent Tensions
This agreement follows a ongoing row between the drug companies and the ministers over spending levels and NHS adoption.
The disagreement were intensified by assertions that US consumers were charged several times more for the same drugs than people in the Britain and the EU.
Recently, several significant manufacturing plans in the UK have been paused or abandoned, while substantial expansions have been pledged toward US facilities.
The Science Minister acknowledged that the NHS must spend more on medicines, noting that its expenditure on drugs had decreased as a share of its total funding over the last ten years.
