The United Kingdom and the United States have concluded a landmark trade agreement that will guarantee no duties on UK medicine products entering the US market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has agreed to raise funding on drugs through the NHS. This commitment ensures that duties on these key products will stay at zero for a timeframe of three years.
This deal comes after recent warnings to significantly raise tariffs on patented pharmaceutical imports, with increases mentioned up to double the cost.
"This arrangement between the UK reinforces the international landscape for cutting-edge drugs and introduces much-needed equity to American-British pharmaceutical trade," an announcement said.
Economic Significance
Pharmaceuticals constitute one of the the United Kingdom's biggest goods shipped to the US, which is easily the biggest destination for leading companies like GSK and AstraZeneca.
Export figures indicate that in the year leading up to last September, the UK sold drugs valued at £11.1bn to the US. This amount accounted for 17.4% of all goods exports in that span.
"This deal safeguards work, increases funding and facilitates the UK to emerge as a global hub for biotech and pharma," the Business and Trade Secretary stated.
Key British Pledges
The deal includes several notable changes from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the affordability limit at which it considers new medicines to be unaffordable by 25%.
- Increased NHS Spending: There is a aim to increase overall NHS spending on drugs from 0.3% of Gross Domestic Product to 0.6% over the coming ten years.
- Refund Ceiling: The percentage pharmaceutical firms must refund to the NHS to control costs will be limited at 15%. In the past, rebates were more than 20%.
Broader Context
The deal follows a ongoing row between the pharmaceutical industry and the UK government over drug pricing and NHS adoption.
The disagreement were exacerbated by arguments that US customers were charged several times more for the identical medicines than patients in the Britain and the EU.
Over the last 18 months, several major drug company projects in the UK have been delayed or scrapped, while substantial funding commitments have been directed toward projects in the United States.
The Science Minister acknowledged that the NHS needed to increase expenditure on drugs, noting that its spending on drugs had decreased as a percentage of its resources over the last ten years.
