The UK and US have signed a significant trade agreement that will preserve zero tariffs on UK pharmaceutical products going into the American market.
The Terms of the Deal
Under the terms of the agreement, the UK has pledged to increase funding on drugs through the public health system. This pledge ensures that tariffs on these key products will stay at nothing for a timeframe of the next three years.
This development comes after earlier threats to dramatically increase import taxes on branded pharmaceutical products, with increases discussed up to one hundred percent.
"This arrangement between the United Kingdom reinforces the international landscape for cutting-edge drugs and introduces much-needed balance to U.S.–U.K. medicine commerce," a statement said.
Commercial Impact
Medicines represent one of the the United Kingdom's biggest exports to the US, which is by far the primary destination for major UK drugmakers.
Statistics indicate that in the one-year period prior to September, the UK exported pharmaceutical products valued at over eleven billion pounds to the US. This amount represented nearly one-fifth of all goods exports in that period.
"This guarantee secures work, increases capital expenditure and facilitates the UK to emerge as a worldwide center for medical research," a government official commented.
Detailed NHS Changes
The deal includes several specific commitments from the UK:
- Higher Cost Ceiling: The UK will lift the price threshold at which it considers new therapies to be too expensive by a quarter.
- Increased NHS Spending: There is a target to increase total NHS spending on drugs from 0.3 percent of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Payback Limit: The percentage drug companies must pay back to the NHS to stay within budget will be limited at 15%. Last year, repayments topped twenty percent.
Recent Tensions
This agreement comes amid a protracted tension between the pharmaceutical industry and the UK government over medicine costs and approval rates.
This friction were intensified by claims that American patients were charged a premium for the same drugs than people in the UK and Europe.
In recent months, several large pharmaceutical investments in the UK have been delayed or scrapped, while substantial funding commitments have been directed toward American operations.
The Science Minister stated that the NHS needed to increase expenditure on medicines, noting that its expenditure on drugs had shrunk as a percentage of its total funding over the previous ten-year period.
