The UK and US have hammered out a important trade agreement that will maintain zero import taxes on UK drug exports entering the American market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has agreed to boost spending on medicines through the NHS. This move guarantees that tariffs on these crucial exports will stay at nothing for a period of 36 months.
This development comes after recent threats to dramatically increase duties on patented pharmaceutical imports, with figures floated as high as 100%.
"This agreement with the United Kingdom bolsters the worldwide climate for innovative medicines and introduces long-overdue fairness to American-British drug exports," an announcement said.
Commercial Significance
Pharmaceuticals are one of the the United Kingdom's biggest export categories to the United States, which is by far the primary market for large UK drugmakers.
Trade data reveal that in the one-year period leading up to the third quarter, the UK exported drugs valued at over eleven billion pounds to the US. This amount represented 17.4% of all goods exports in that period.
"This agreement protects jobs, increases investment and paves the way for the UK to establish itself as a worldwide center for medical research," the Business and Trade Secretary remarked.
Specific British Pledges
The agreement includes several key pledges from the UK:
- Revised Affordability Limit: The UK will raise the price threshold at which it deems new medicines to be unaffordable by 25%.
- Increased NHS Spending: There is a aim to double total public funding on medicines from 0.3 percent of GDP to 0.6% over the following ten-year period.
- Refund Ceiling: The amount pharmaceutical firms must return to the NHS to stay within budget will be limited at fifteen percent. In the past, rebates topped twenty percent.
Industry Background
This agreement takes place against a ongoing dispute between the pharmaceutical industry and the ministers over drug pricing and approval rates.
These tensions were heightened by arguments that American patients were charged several times more for the equivalent treatments than consumers in the Britain and the EU.
In recent months, several major drug company projects in the UK have been halted or scrapped, while multi-billion-dollar funding commitments have been pledged toward US facilities.
The Science Minister acknowledged that the NHS needed to invest a greater share on drugs, noting that its budget allocation on drugs had shrunk as a share of its total funding over the previous ten-year period.
