The UK and US have signed a landmark commercial pact that will preserve zero duties on British drug shipments going into the US market.
Agreement Details of the Accord
Under the terms of the agreement, the UK has pledged to increase expenditure on pharmaceuticals through the National Health Service (NHS). This move secures that tariffs on these key exports will remain at zero for a duration of three years.
This agreement follows earlier threats to dramatically increase tariffs on patented pharmaceutical products, with figures floated up to double the cost.
"This deal between the United Kingdom bolsters the global environment for innovative medicines and establishes much-needed equity to transatlantic medicine commerce," an announcement noted.
Trade Impact
Medicines represent one of the the United Kingdom's largest goods shipped to the America, which is by far the biggest buyer for major UK drugmakers.
Statistics indicate that in the one-year period prior to last September, the UK sold drugs totaling billions to the US. This amount represented nearly one-fifth of total UK exports in that period.
"This deal secures employment, boosts capital expenditure and facilitates the UK to establish itself as a worldwide center for biotech and pharma," the Business and Trade Secretary stated.
Detailed NHS Changes
The pact involves several specific pledges from the British government:
- Price Threshold Increase: The UK will increase the affordability limit at which it judges new therapies to be too expensive by a quarter.
- Increased NHS Spending: There is a target to increase total public funding on drugs from 0.3 percent of Gross Domestic Product to 0.6% over the next decade.
- Refund Ceiling: The percentage pharmaceutical firms must pay back to the NHS to prevent overspending will be limited at 15%. Previously, repayments were more than 20%.
Broader Context
The deal takes place against a protracted row between the pharmaceutical industry and the British authorities over medicine costs and regulatory access.
These tensions were intensified by arguments that American patients were charged significantly more for the identical medicines than consumers in the other developed nations.
Over the last 18 months, several large drug company projects in the UK have been halted or cancelled, while multi-billion-dollar investments have been pledged toward American operations.
A senior figure acknowledged that the NHS needed to spend more on drugs, noting that its expenditure on drugs had decreased as a proportion of its total funding over the previous ten-year period.
