The UK and US have forged a landmark trade agreement that will keep no duties on British pharmaceutical shipments going into the American market.
Key Provisions of the Deal
As part of the deal, the UK has agreed to boost funding on drugs through the National Health Service (NHS). This commitment secures that duties on these crucial products will be held at nothing for a period of three years.
This development is in response to recent threats to significantly raise import taxes on patented pharmaceutical imports, with potential rates mentioned as high as 100%.
"This arrangement with the UK bolsters the global environment for innovative medicines and introduces much-needed equity to transatlantic medicine commerce," a statement said.
Economic Importance
Pharmaceuticals are one of the Britain's most significant export categories to the America, which is easily the biggest destination for large companies like GSK and AstraZeneca.
Export figures show that in the year leading up to last September, the UK shipped medicines worth billions to the US. This figure made up 17.4% of total UK exports in that period.
"This guarantee secures jobs, stimulates capital expenditure and sets the stage for the UK to emerge as a international leader for life sciences," the Business and Trade Secretary commented.
Specific UK Commitments
The pact entails several notable changes from the UK:
- Price Threshold Increase: The UK will raise the cost ceiling at which it deems new treatments to be unaffordable by a quarter.
- Higher Drug Budget: There is a goal to increase total health service expenditure on medicines from 0.3 percent of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Payback Limit: The percentage manufacturers must return to the NHS to stay within budget will be limited at 15%. Last year, rebates topped twenty percent.
Industry Background
This agreement comes amid a protracted row between the pharmaceutical industry and the UK government over drug pricing and regulatory access.
The disagreement were intensified by assertions that US customers were charged significantly more for the equivalent treatments than people in the other developed nations.
Over the last 18 months, several significant drug company projects in the UK have been delayed or abandoned, while substantial funding commitments have been announced toward projects in the United States.
A senior figure acknowledged that the NHS must increase expenditure on treatments, noting that its expenditure on drugs had declined as a share of its total funding over the last ten years.
