The UK and US have reached a landmark bilateral deal that will keep no duties on UK pharmaceutical shipments going into the American market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has pledged to raise expenditure on pharmaceuticals through the National Health Service (NHS). This pledge guarantees that import taxes on these key exports will remain at nothing for a period of the next three years.
This development follows previous threats to significantly raise tariffs on branded drug imports, with figures discussed as high as double the cost.
"This arrangement between the UK strengthens the international landscape for innovative medicines and brings long-overdue balance to transatlantic drug exports," an announcement said.
Economic Impact
Pharmaceuticals represent one of the UK's most significant goods shipped to the United States, which is easily the primary destination for leading companies like GSK and AstraZeneca.
Statistics indicate that in the one-year period leading up to last September, the UK sold drugs totaling £11.1bn to the US. This amount made up 17.4% of British export trade in that period.
"This agreement protects work, stimulates investment and paves the way for the UK to emerge as a international leader for life sciences," a minister commented.
Key British Pledges
The pact includes several key changes from the United Kingdom:
- Higher Cost Ceiling: The UK will increase the price threshold at which it deems new treatments to be too expensive by twenty-five percent.
- Boosted Medicine Funding: There is a goal to increase total public funding on treatments from 0.3% of GDP to 0.6% over the following ten-year period.
- Rebate Cap: The percentage manufacturers must return to the NHS to prevent overspending will be capped at 15%. In the past, rebates exceeded 20%.
Recent Tensions
The pact takes place against a long-running dispute between the drug companies and the ministers over drug pricing and regulatory access.
These tensions were exacerbated by claims that US patients were paying several times more for the identical medicines than people in the Britain and the EU.
Recently, several large drug company projects in the UK have been delayed or scrapped, while multi-billion-dollar expansions have been pledged toward American operations.
One official acknowledged that the NHS had to spend more on drugs, noting that its expenditure on drugs had declined as a share of its overall budget over the last ten years.
