The UK and US have reached a significant bilateral deal that will guarantee zero levies on British pharmaceutical shipments going into the US market.
The Terms of the Accord
As part of the deal, the UK has pledged to boost spending on medicines through the National Health Service (NHS). This move guarantees that tariffs on these key products will be held at zero for a duration of the next three years.
This deal comes after previous warnings to hike import taxes on patented pharmaceutical products, with potential rates discussed up to 100%.
"This deal with the Britain reinforces the worldwide climate for innovative medicines and introduces much-needed fairness to U.S.–U.K. drug exports," a statement noted.
Trade Importance
Pharmaceuticals are one of the the United Kingdom's largest export categories to the United States, which is by far the biggest destination for leading companies like GSK and AstraZeneca.
Export figures reveal that in the 12 months prior to last September, the UK sold pharmaceutical products valued at over eleven billion pounds to the US. This amount represented 17.4% of total UK exports in that span.
"This agreement secures employment, boosts funding and facilitates the UK to emerge as a global hub for medical research," a government official remarked.
Detailed UK Commitments
The pact entails several notable changes from the United Kingdom:
- Higher Cost Ceiling: The UK will increase the affordability limit at which it considers new medicines to be unaffordable by a quarter.
- Increased NHS Spending: There is a target to raise total NHS spending on treatments from 0.3% of GDP to 0.6% over the next decade.
- Payback Limit: The amount drug companies must refund to the NHS to control costs will be restricted at fifteen percent. Last year, refunds were more than 20%.
Industry Background
The deal follows a long-running row between the pharmaceutical industry and the UK government over medicine costs and approval rates.
The disagreement were heightened by arguments that American customers were paying several times more for the equivalent treatments than consumers in the UK and Europe.
Over the last 18 months, several major pharmaceutical investments in the UK have been delayed or abandoned, while substantial funding commitments have been directed toward US facilities.
One official publicly accepted that the NHS must invest a greater share on treatments, noting that its expenditure on drugs had shrunk as a proportion of its total funding over the last ten years.
