The UK and US have agreed to a significant bilateral deal that will ensure zero import taxes on UK drug shipments being sold in the US market.
Key Provisions of the Accord
As part of the deal, the UK has agreed to increase expenditure on pharmaceuticals through the NHS. This pledge guarantees that import taxes on these vital exports will be held at zero for a period of three years.
This agreement follows previous threats to hike duties on patented pharmaceutical products, with figures discussed as high as 100%.
"This arrangement with the UK strengthens the worldwide climate for innovative medicines and establishes long-overdue equity to transatlantic pharmaceutical trade," a statement noted.
Commercial Significance
Pharmaceuticals are one of the Britain's largest exports to the US, which is clearly the largest market for leading UK drugmakers.
Export figures show that in the one-year period leading up to last September, the UK exported pharmaceutical products valued at £11.1bn to the US. This value represented a significant portion of all goods exports in that span.
"This agreement safeguards employment, increases capital expenditure and paves the way for the UK to become a international leader for life sciences," the Business and Trade Secretary remarked.
Specific British Pledges
The agreement involves several key changes from the British government:
- Revised Affordability Limit: The UK will raise the affordability limit at which it considers new therapies to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a goal to double overall NHS spending on medicines from 0.3 percent of Gross Domestic Product to 0.6 percent over the next decade.
- Refund Ceiling: The sum drug companies must pay back to the NHS to prevent overspending will be capped at fifteen percent. In the past, rebates were more than twenty percent.
Recent Tensions
This agreement comes amid a long-running row between the drug companies and the ministers over spending levels and NHS adoption.
These tensions were heightened by claims that US patients were charged significantly more for the same drugs than people in the Britain and the EU.
In recent months, several significant drug company projects in the UK have been delayed or scrapped, while substantial expansions have been announced toward projects in the United States.
A senior figure publicly accepted that the NHS had to invest a greater share on medicines, noting that its spending on drugs had declined as a percentage of its total funding over the last ten years.
