The UK and US have agreed to a major trade agreement that will guarantee no levies on UK pharmaceutical products entering the American market.
The Terms of the Accord
As part of the deal, the UK has pledged to boost spending on pharmaceuticals through the public health system. This commitment guarantees that tariffs on these key products will be held at zero for a duration of the next three years.
This deal follows earlier warnings to dramatically increase duties on branded drug imports, with increases discussed as high as one hundred percent.
"This deal between the UK strengthens the worldwide climate for innovative medicines and brings long-overdue equity to U.S.–U.K. pharmaceutical trade," a release noted.
Commercial Importance
Medicines constitute one of the the United Kingdom's biggest goods shipped to the America, which is by far the biggest market for large UK drugmakers.
Trade data reveal that in the 12 months to the end of last September, the UK sold medicines valued at £11.1bn to the US. This amount represented nearly one-fifth of total UK exports in that period.
"This agreement secures jobs, boosts capital expenditure and sets the stage for the UK to establish itself as a global hub for biotech and pharma," a minister commented.
Specific British Pledges
The deal entails several notable changes from the United Kingdom:
- Higher Cost Ceiling: The UK will increase the affordability limit at which it deems new medicines to be unaffordable by 25%.
- Higher Drug Budget: There is a goal to double overall NHS spending on medicines from 0.3 percent of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Payback Limit: The sum drug companies must return to the NHS to control costs will be restricted at 15%. Last year, rebates were more than 20%.
Recent Tensions
This agreement comes amid a long-running tension between the pharmaceutical industry and the British authorities over drug pricing and NHS adoption.
The disagreement were heightened by arguments that American consumers were charged a premium for the equivalent treatments than people in the Britain and the EU.
Recently, several significant drug company projects in the UK have been halted or scrapped, while multi-billion-dollar expansions have been pledged toward projects in the United States.
The Science Minister stated that the NHS must spend more on drugs, noting that its expenditure on drugs had declined as a percentage of its resources over the past decade.
