The UK and US have signed a landmark bilateral deal that will ensure zero duties on British pharmaceutical shipments being sold in the US market.
Key Provisions of the Accord
Under the terms of the agreement, the UK has committed to increase spending on drugs through the National Health Service (NHS). This commitment secures that duties on these vital exports will stay at zero for a period of the next three years.
This deal comes after previous warnings to significantly raise import taxes on branded drug imports, with increases floated as high as 100%.
"This deal with the UK bolsters the global environment for cutting-edge drugs and establishes long-overdue equity to U.S.–U.K. medicine commerce," a statement said.
Commercial Importance
Drugs are one of the the United Kingdom's largest exports to the US, which is easily the largest market for major British pharmaceutical firms.
Trade data reveal that in the year to the end of September, the UK sold medicines worth over eleven billion pounds to the US. This value accounted for nearly one-fifth of British export trade in that period.
"This guarantee protects work, boosts investment and paves the way for the UK to become a worldwide center for life sciences," the Business and Trade Secretary commented.
Detailed British Pledges
The pact includes several specific changes from the British government:
- Price Threshold Increase: The UK will raise the affordability limit at which it judges new medicines to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a goal to increase total health service expenditure on treatments from 0.3 percent of the national economy to 0.6% over the coming ten years.
- Payback Limit: The amount pharmaceutical firms must pay back to the NHS to stay within budget will be restricted at 15%. In the past, refunds topped twenty percent.
Recent Tensions
The pact comes amid a ongoing tension between the drug companies and the British authorities over drug pricing and regulatory access.
These tensions were exacerbated by claims that US consumers were paying significantly more for the equivalent treatments than patients in the other developed nations.
Recently, several significant manufacturing plans in the UK have been halted or abandoned, while substantial expansions have been pledged toward American operations.
One official publicly accepted that the NHS must invest a greater share on medicines, noting that its spending on drugs had decreased as a share of its overall budget over the last ten years.
