The United Kingdom and the United States have announced a landmark trade agreement that will ensure zero tariffs on British pharmaceutical shipments going into the US market.
Key Provisions of the Deal
As part of the deal, the UK has pledged to increase spending on medicines through the public health system. This pledge ensures that import taxes on these vital exports will be held at nothing for a timeframe of 36 months.
This agreement is in response to previous warnings to hike import taxes on branded drug imports, with increases floated reaching 100%.
"This deal with the Britain bolsters the international landscape for new treatments and introduces much-needed balance to American-British medicine commerce," a statement said.
Economic Impact
Drugs constitute one of the UK's largest goods shipped to the United States, which is by far the primary destination for leading UK drugmakers.
Statistics indicate that in the 12 months leading up to last September, the UK sold medicines worth £11.1bn to the US. This value accounted for 17.4% of British export trade in that span.
"This guarantee secures employment, stimulates investment and facilitates the UK to establish itself as a global hub for biotech and pharma," a government official commented.
Key British Pledges
The pact involves several key changes from the United Kingdom:
- Price Threshold Increase: The UK will increase the affordability limit at which it deems new medicines to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a aim to raise total NHS spending on drugs from 0.3% of GDP to 0.6 percent over the next decade.
- Payback Limit: The sum manufacturers must return to the NHS to stay within budget will be limited at 15%. Previously, repayments were more than 20%.
Recent Tensions
This agreement takes place against a protracted tension between the drug companies and the UK government over drug pricing and regulatory access.
The disagreement were heightened by arguments that US consumers were paying several times more for the equivalent treatments than patients in the Britain and the EU.
Over the last 18 months, several significant manufacturing plans in the UK have been delayed or abandoned, while substantial expansions have been announced toward projects in the United States.
One official acknowledged that the NHS needed to spend more on treatments, noting that its expenditure on drugs had shrunk as a percentage of its overall budget over the last ten years.
