Britain and America have signed a important bilateral deal that will keep no import taxes on UK drug exports going into the US market.
Key Provisions of the Deal
Under the terms of the agreement, the UK has committed to increase spending on pharmaceuticals through the NHS. This pledge guarantees that duties on these vital goods will stay at zero for a timeframe of the next three years.
This agreement is in response to recent warnings to dramatically increase import taxes on patented pharmaceutical products, with increases floated as high as double the cost.
"This arrangement with the United Kingdom strengthens the worldwide climate for innovative medicines and brings much-needed equity to transatlantic pharmaceutical trade," an announcement noted.
Trade Impact
Pharmaceuticals are one of the Britain's most significant exports to the US, which is by far the primary market for major companies like GSK and AstraZeneca.
Trade data show that in the 12 months prior to the third quarter, the UK sold drugs valued at £11.1bn to the US. This value represented 17.4% of all goods exports in that period.
"This guarantee secures jobs, boosts investment and sets the stage for the UK to become a global hub for medical research," a minister commented.
Key British Pledges
The agreement involves several key pledges from the British government:
- Higher Cost Ceiling: The UK will raise the cost ceiling at which it considers new treatments to be prohibitively costly by 25%.
- Increased NHS Spending: There is a aim to double total public funding on treatments from 0.3% of GDP to 0.6 percent over the following ten-year period.
- Rebate Cap: The amount manufacturers must pay back to the NHS to prevent overspending will be limited at fifteen percent. In the past, refunds were more than twenty percent.
Industry Background
This agreement comes amid a long-running tension between the sector and the UK government over spending levels and regulatory access.
This friction were intensified by arguments that American customers were paying significantly more for the equivalent treatments than people in the Britain and the EU.
Over the last 18 months, several significant manufacturing plans in the UK have been paused or scrapped, while substantial investments have been directed toward American operations.
The Science Minister stated that the NHS had to invest a greater share on drugs, noting that its expenditure on drugs had declined as a percentage of its resources over the previous ten-year period.
