The United Kingdom and the United States have agreed to a major bilateral deal that will keep no duties on British drug shipments going into the American market.
Agreement Details of the Pact
Under the terms of the agreement, the UK has pledged to increase expenditure on medicines through the public health system. This pledge guarantees that duties on these key products will be held at nothing for a timeframe of the next three years.
This deal is in response to earlier threats to hike tariffs on branded drug products, with potential rates discussed reaching double the cost.
"This agreement between the United Kingdom strengthens the worldwide climate for innovative medicines and brings much-needed fairness to American-British pharmaceutical trade," an announcement said.
Trade Significance
Drugs are one of the UK's biggest export categories to the United States, which is easily the biggest destination for leading UK drugmakers.
Trade data show that in the year to the end of last September, the UK exported drugs totaling £11.1bn to the US. This value accounted for a significant portion of all goods exports in that span.
"This deal protects jobs, increases capital expenditure and sets the stage for the UK to establish itself as a international leader for life sciences," the Business and Trade Secretary remarked.
Key UK Commitments
The deal involves several specific changes from the United Kingdom:
- Price Threshold Increase: The UK will lift the affordability limit at which it considers new medicines to be prohibitively costly by a quarter.
- Boosted Medicine Funding: There is a aim to increase total NHS spending on drugs from 0.3 percent of the national economy to 0.6 percent over the following ten-year period.
- Rebate Cap: The amount pharmaceutical firms must return to the NHS to prevent overspending will be limited at fifteen percent. In the past, rebates topped 20%.
Recent Tensions
This agreement takes place against a ongoing row between the sector and the ministers over medicine costs and approval rates.
These tensions were intensified by claims that American patients were paying significantly more for the equivalent treatments than people in the Britain and the EU.
Recently, several large pharmaceutical investments in the UK have been halted or cancelled, while multi-billion-dollar expansions have been pledged toward projects in the United States.
The Science Minister publicly accepted that the NHS had to increase expenditure on treatments, noting that its expenditure on drugs had shrunk as a share of its resources over the previous ten-year period.
