The UK and US have hammered out a major trade agreement that will preserve zero levies on British drug products entering the American market.
The Terms of the Accord
Under the terms of the agreement, the UK has pledged to raise funding on pharmaceuticals through the public health system. This pledge ensures that duties on these vital products will remain at nothing for a period of the next three years.
This deal is in response to recent statements to dramatically increase import taxes on branded drug imports, with increases mentioned as high as 100%.
"This agreement between the Britain strengthens the global environment for innovative medicines and establishes long-overdue balance to U.S.–U.K. pharmaceutical trade," an announcement noted.
Trade Impact
Pharmaceuticals represent one of the Britain's biggest export categories to the United States, which is easily the primary market for large UK drugmakers.
Export figures show that in the year prior to the third quarter, the UK sold pharmaceutical products totaling £11.1bn to the US. This figure made up 17.4% of British export trade in that period.
"This deal secures work, boosts capital expenditure and paves the way for the UK to become a worldwide center for medical research," the Business and Trade Secretary remarked.
Specific UK Commitments
The pact involves several notable changes from the British government:
- Higher Cost Ceiling: The UK will lift the affordability limit at which it deems new medicines to be prohibitively costly by a quarter.
- Higher Drug Budget: There is a aim to increase total NHS spending on drugs from 0.3% of Gross Domestic Product to 0.6% over the next decade.
- Rebate Cap: The percentage pharmaceutical firms must refund to the NHS to prevent overspending will be limited at 15%. Previously, rebates topped twenty percent.
Recent Tensions
The pact takes place against a protracted dispute between the sector and the UK government over medicine costs and approval rates.
The disagreement were exacerbated by assertions that US patients were paying a premium for the equivalent treatments than patients in the other developed nations.
In recent months, several significant pharmaceutical investments in the UK have been delayed or abandoned, while major funding commitments have been announced toward US facilities.
A senior figure publicly accepted that the NHS had to spend more on drugs, noting that its budget allocation on drugs had decreased as a share of its overall budget over the last ten years.
