Britain and America have hammered out a key bilateral deal that will ensure zero tariffs on British medicine products going into the American market.
Agreement Details of the Pact
As part of the deal, the UK has committed to increase spending on drugs through the National Health Service (NHS). This commitment ensures that tariffs on these crucial products will stay at zero for a timeframe of 36 months.
This deal is in response to previous warnings to dramatically increase import taxes on patented pharmaceutical imports, with increases floated as high as double the cost.
"This agreement between the UK strengthens the global environment for cutting-edge drugs and establishes long-overdue balance to transatlantic drug exports," a release noted.
Trade Importance
Pharmaceuticals constitute one of the UK's largest exports to the US, which is by far the biggest buyer for leading British pharmaceutical firms.
Export figures show that in the year prior to the third quarter, the UK exported drugs totaling £11.1bn to the US. This value accounted for 17.4% of British export trade in that period.
"This agreement protects employment, stimulates capital expenditure and paves the way for the UK to become a worldwide center for life sciences," the Business and Trade Secretary commented.
Key British Pledges
The pact involves several specific changes from the British government:
- Price Threshold Increase: The UK will increase the affordability limit at which it deems new therapies to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a aim to double total NHS spending on medicines from 0.3% of GDP to 0.6 percent over the following ten-year period.
- Payback Limit: The amount manufacturers must return to the NHS to prevent overspending will be capped at 15%. Last year, rebates exceeded twenty percent.
Recent Tensions
The pact comes amid a ongoing dispute between the drug companies and the UK government over drug pricing and approval rates.
This friction were exacerbated by claims that US consumers were paying a premium for the equivalent treatments than patients in the UK and Europe.
Over the last 18 months, several major manufacturing plans in the UK have been paused or abandoned, while multi-billion-dollar expansions have been announced toward US facilities.
The Science Minister publicly accepted that the NHS had to increase expenditure on drugs, noting that its budget allocation on drugs had declined as a percentage of its overall budget over the last ten years.
