The United Kingdom and the United States have forged a major trade agreement that will keep zero tariffs on British pharmaceutical exports being sold in the US market.
Key Provisions of the Deal
Under the terms of the agreement, the UK has pledged to raise funding on drugs through the National Health Service (NHS). This pledge guarantees that import taxes on these crucial products will remain at zero for a period of three years.
This deal is in response to recent threats to hike import taxes on patented pharmaceutical imports, with increases floated up to double the cost.
"This deal with the United Kingdom reinforces the global environment for innovative medicines and brings long-overdue balance to U.S.–U.K. drug exports," a release noted.
Commercial Impact
Drugs constitute one of the UK's most significant export categories to the United States, which is easily the primary market for leading companies like GSK and AstraZeneca.
Export figures show that in the 12 months leading up to September, the UK exported medicines worth over eleven billion pounds to the US. This value made up a significant portion of all goods exports in that period.
"This deal protects employment, stimulates investment and paves the way for the UK to emerge as a international leader for life sciences," the Business and Trade Secretary remarked.
Specific British Pledges
The agreement includes several key pledges from the United Kingdom:
- Revised Affordability Limit: The UK will raise the cost ceiling at which it considers new therapies to be unaffordable by a quarter.
- Boosted Medicine Funding: There is a aim to raise total NHS spending on drugs from 0.3 percent of GDP to 0.6 percent over the next decade.
- Payback Limit: The amount pharmaceutical firms must pay back to the NHS to control costs will be restricted at fifteen percent. Previously, rebates topped 20%.
Industry Background
The pact comes amid a long-running dispute between the sector and the British authorities over spending levels and approval rates.
The disagreement were heightened by arguments that US patients were charged a premium for the equivalent treatments than people in the other developed nations.
In recent months, several major pharmaceutical investments in the UK have been delayed or cancelled, while major investments have been announced toward US facilities.
The Science Minister stated that the NHS needed to spend more on drugs, noting that its expenditure on drugs had declined as a percentage of its resources over the past decade.
