The United Kingdom and the United States have agreed to a landmark trade agreement that will guarantee zero import taxes on UK medicine products being sold in the US market.
The Terms of the Accord
In exchange for the tariff guarantee, the UK has committed to increase expenditure on medicines through the National Health Service (NHS). This commitment ensures that import taxes on these vital products will stay at nothing for a duration of 36 months.
This agreement is in response to earlier statements to hike duties on patented pharmaceutical products, with increases discussed up to 100%.
"This deal with the Britain reinforces the global environment for innovative medicines and brings long-overdue balance to American-British drug exports," a release noted.
Commercial Impact
Drugs are one of the Britain's largest goods shipped to the United States, which is clearly the biggest destination for leading companies like GSK and AstraZeneca.
Statistics reveal that in the 12 months prior to last September, the UK sold drugs valued at billions to the US. This amount made up 17.4% of total UK exports in that period.
"This guarantee safeguards jobs, boosts investment and paves the way for the UK to become a international leader for medical research," a government official commented.
Specific UK Commitments
The pact includes several specific pledges from the British government:
- Higher Cost Ceiling: The UK will raise the affordability limit at which it considers new therapies to be unaffordable by a quarter.
- Increased NHS Spending: There is a aim to double total public funding on drugs from 0.3% of Gross Domestic Product to 0.6 percent over the coming ten years.
- Rebate Cap: The amount pharmaceutical firms must return to the NHS to prevent overspending will be restricted at 15%. In the past, refunds topped 20%.
Industry Background
The deal comes amid a long-running row between the sector and the UK government over drug pricing and regulatory access.
The disagreement were exacerbated by claims that American patients were paying a premium 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 abandoned, while major expansions have been announced toward projects in the United States.
One official publicly accepted that the NHS must increase expenditure on treatments, noting that its expenditure on drugs had declined as a percentage of its total funding over the last ten years.
