The UK and US have signed a major commercial pact that will ensure zero tariffs on British medicine exports entering the US market.
The Terms of the Deal
Under the terms of the agreement, the UK has agreed to increase spending on pharmaceuticals through the National Health Service (NHS). This commitment secures that tariffs on these key goods will be held at zero for a timeframe of 36 months.
This deal is in response to recent threats to significantly raise duties on branded drug imports, with figures discussed as high as double the cost.
"This agreement between the United Kingdom strengthens the international landscape for innovative medicines and introduces much-needed fairness to transatlantic medicine commerce," an announcement said.
Trade Importance
Pharmaceuticals are one of the the United Kingdom's biggest export categories to the US, which is clearly the primary market for large UK drugmakers.
Statistics reveal that in the 12 months leading up to September, the UK shipped drugs totaling £11.1bn to the US. This amount represented a significant portion of all goods exports in that period.
"This agreement secures employment, boosts investment and paves the way for the UK to become a international leader for biotech and pharma," a minister commented.
Key British Pledges
The deal entails several specific pledges from the UK:
- Higher Cost Ceiling: The UK will increase the price threshold at which it deems new medicines to be unaffordable by 25%.
- Increased NHS Spending: There is a goal to raise total public funding on medicines from 0.3 percent of GDP to 0.6% over the coming ten years.
- Rebate Cap: The amount pharmaceutical firms must refund to the NHS to prevent overspending will be limited at fifteen percent. Last year, repayments topped twenty percent.
Broader Context
This agreement follows a protracted tension between the sector and the British authorities over drug pricing and NHS adoption.
This friction were heightened by arguments that US consumers were paying significantly more for the same drugs than consumers in the UK and Europe.
In recent months, several large drug company projects in the UK have been paused or cancelled, while multi-billion-dollar expansions have been pledged toward projects in the United States.
The Science Minister acknowledged that the NHS had to increase expenditure on drugs, noting that its expenditure on drugs had declined as a percentage of its total funding over the previous ten-year period.
