The UK and US have announced a key trade agreement that will guarantee no import taxes on UK pharmaceutical exports entering the US market.
The Terms of the Pact
In exchange for the tariff guarantee, the UK has agreed to increase spending on drugs through the National Health Service (NHS). This move guarantees that duties on these vital exports will remain at nothing for a period of 36 months.
This deal follows previous warnings to dramatically increase tariffs on patented drug imports, with potential rates floated reaching double the cost.
"This arrangement with the United Kingdom reinforces the international landscape for cutting-edge drugs and brings long-overdue equity to American-British pharmaceutical trade," a release said.
Trade Significance
Medicines represent one of the Britain's largest goods shipped to the US, which is by far the biggest buyer for large companies like GSK and AstraZeneca.
Export figures show that in the 12 months leading up to the third quarter, the UK exported pharmaceutical products worth billions to the US. This amount accounted for nearly one-fifth of all goods exports in that timeframe.
"This deal safeguards employment, stimulates funding and sets the stage for the UK to emerge as a international leader for life sciences," a government official commented.
Specific British Pledges
The pact entails several specific pledges from the British government:
- Higher Cost Ceiling: The UK will increase the affordability limit at which it deems new medicines to be too expensive by a quarter.
- Boosted Medicine Funding: There is a aim to increase total public funding on medicines from 0.3 percent of Gross Domestic Product to 0.6% over the coming ten years.
- Refund Ceiling: The percentage drug companies must refund to the NHS to prevent overspending will be restricted at 15%. Previously, repayments exceeded 20%.
Industry Background
The pact takes place against a ongoing tension between the pharmaceutical industry and the British authorities over drug pricing and approval rates.
These tensions were intensified by assertions that American patients were paying several times more for the same drugs than consumers in the UK and Europe.
Over the last 18 months, several significant pharmaceutical investments in the UK have been paused or scrapped, while substantial funding commitments have been announced toward projects in the United States.
The Science Minister stated that the NHS had to increase expenditure on treatments, noting that its spending on drugs had declined as a percentage of its resources over the past decade.
