The UK and US have established a key bilateral deal that will guarantee zero duties on UK drug exports being sold in the US market.
Key Provisions of the Accord
Under the terms of the agreement, the UK has agreed to increase spending on pharmaceuticals through the NHS. This pledge ensures that import taxes on these crucial goods will be held at zero for a period of the next three years.
This agreement comes after recent statements to hike duties on branded drug products, with potential rates floated reaching double the cost.
"This arrangement between the UK reinforces the global environment for new treatments and establishes much-needed equity to U.S.–U.K. pharmaceutical trade," a statement declared.
Economic Importance
Pharmaceuticals are one of the UK's largest export categories to the America, which is by far the primary market for leading UK drugmakers.
Trade data indicate that in the 12 months leading up to last September, the UK exported pharmaceutical products totaling £11.1bn to the US. This value represented 17.4% of British export trade in that period.
"This agreement safeguards jobs, stimulates investment and sets the stage for the UK to become a global hub for life sciences," a government official commented.
Specific UK Commitments
The agreement includes several notable pledges from the UK:
- Price Threshold Increase: The UK will raise the affordability limit at which it considers new treatments to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a aim to double total NHS spending on medicines from 0.3 percent of GDP to 0.6% over the next decade.
- Rebate Cap: The amount pharmaceutical firms must refund to the NHS to prevent overspending will be restricted at fifteen percent. Last year, repayments topped 20%.
Recent Tensions
The pact comes amid a long-running dispute between the drug companies and the British authorities over spending levels and NHS adoption.
The disagreement were exacerbated by claims that US patients were paying a premium for the same drugs than consumers in the other developed nations.
Over the last 18 months, several major manufacturing plans in the UK have been delayed or abandoned, while major expansions have been pledged toward American operations.
The Science Minister stated that the NHS needed to spend more on treatments, noting that its expenditure on drugs had declined as a share of its overall budget over the last ten years.
