The United Kingdom and the United States have signed a major bilateral deal that will ensure zero import taxes on UK pharmaceutical shipments going into the US market.
Key Provisions of the Deal
Under the terms of the agreement, the UK has committed to boost expenditure on drugs through the National Health Service (NHS). This pledge guarantees that duties on these crucial products will be held at zero for a timeframe of the next three years.
This agreement comes after recent threats to dramatically increase duties on branded drug products, with potential rates discussed reaching 100%.
"This agreement between the Britain bolsters the worldwide climate for innovative medicines and establishes much-needed balance to transatlantic pharmaceutical trade," a statement declared.
Trade Importance
Pharmaceuticals constitute one of the the United Kingdom's largest export categories to the US, which is easily the biggest buyer for leading British pharmaceutical firms.
Export figures show that in the one-year period prior to the third quarter, the UK sold drugs worth £11.1bn to the US. This value made up a significant portion of all goods exports in that period.
"This deal protects jobs, boosts funding and paves the way for the UK to emerge as a global hub for life sciences," the Business and Trade Secretary commented.
Key British Pledges
The pact entails several key pledges from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the price threshold at which it judges new therapies to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a target to raise overall public funding on drugs from 0.3% of GDP to 0.6 percent over the coming ten years.
- Payback Limit: The percentage pharmaceutical firms must refund to the NHS to control costs will be capped at fifteen percent. In the past, refunds topped twenty percent.
Recent Tensions
The pact takes place against a protracted row between the drug companies and the British authorities over drug pricing and approval rates.
These tensions were heightened by claims that US customers were charged a premium for the same drugs than consumers in the UK and Europe.
Recently, several large manufacturing plans in the UK have been paused or scrapped, while substantial funding commitments have been pledged toward projects in the United States.
The Science Minister publicly accepted that the NHS must spend more on medicines, noting that its spending on drugs had declined as a proportion of its total funding over the previous ten-year period.
