The United Kingdom and the United States have secured a important bilateral deal that will guarantee zero levies on British pharmaceutical exports entering the American market.
Agreement Details of the Accord
In exchange for the tariff guarantee, the UK has committed to increase funding on drugs through the National Health Service (NHS). This commitment ensures that duties on these key products will remain at nothing for a timeframe of the next three years.
This deal follows recent statements to hike tariffs on patented pharmaceutical imports, with potential rates mentioned reaching double the cost.
"This agreement with the UK bolsters the international landscape for new treatments and establishes long-overdue balance to American-British pharmaceutical trade," an announcement said.
Economic Importance
Pharmaceuticals are one of the the United Kingdom's biggest export categories to the US, which is by far the biggest buyer for large companies like GSK and AstraZeneca.
Export figures indicate that in the 12 months to the end of last September, the UK exported pharmaceutical products valued at billions to the US. This figure accounted for nearly one-fifth of all goods exports in that period.
"This deal safeguards jobs, increases capital expenditure and paves the way for the UK to emerge as a international leader for medical research," the Business and Trade Secretary commented.
Specific UK Commitments
The pact involves several notable changes from the United Kingdom:
- Price Threshold Increase: The UK will increase the affordability limit at which it judges new treatments to be too expensive by twenty-five percent.
- Higher Drug Budget: There is a aim to double total NHS spending on treatments from 0.3 percent of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Refund Ceiling: The amount pharmaceutical firms must pay back to the NHS to stay within budget will be restricted at fifteen percent. Previously, rebates were more than 20%.
Broader Context
This agreement comes amid a long-running row between the drug companies and the UK government over medicine costs and approval rates.
The disagreement were exacerbated by assertions that American patients were paying several times more for the identical medicines than patients in the UK and Europe.
Over the last 18 months, several large drug company projects in the UK have been halted or cancelled, while multi-billion-dollar investments have been announced toward projects in the United States.
The Science Minister acknowledged that the NHS needed to increase expenditure on treatments, noting that its budget allocation on drugs had decreased as a percentage of its total funding over the past decade.
