The United Kingdom and the United States have concluded a important trade agreement that will keep zero import taxes on UK drug products entering the US market.
Key Provisions of the Deal
As part of the deal, the UK has pledged to boost funding on drugs through the public health system. This move ensures that duties on these vital products will be held at zero for a timeframe of 36 months.
This development is in response to previous statements to hike tariffs on patented pharmaceutical imports, with increases mentioned up to one hundred percent.
"This agreement with the UK reinforces the global environment for new treatments and establishes long-overdue fairness to U.S.–U.K. pharmaceutical trade," a statement said.
Trade Significance
Drugs represent one of the the United Kingdom's largest export categories to the United States, which is easily the largest market for major British pharmaceutical firms.
Export figures indicate that in the one-year period to the end of September, the UK shipped drugs valued at billions to the US. This value accounted for 17.4% of British export trade in that span.
"This guarantee secures work, stimulates investment and sets the stage for the UK to emerge as a worldwide center for life sciences," a minister commented.
Detailed UK Commitments
The deal involves several specific pledges from the United Kingdom:
- Price Threshold Increase: The UK will lift the affordability limit at which it deems new medicines to be unaffordable by a quarter.
- Higher Drug Budget: There is a goal to raise total NHS spending on treatments from 0.3 percent of Gross Domestic Product to 0.6 percent over the next decade.
- Rebate Cap: The amount manufacturers must pay back to the NHS to prevent overspending will be limited at fifteen percent. Previously, rebates exceeded twenty percent.
Industry Background
This agreement takes place against a long-running row between the pharmaceutical industry and the UK government over spending levels and approval rates.
These tensions were intensified by arguments that US patients were charged significantly more for the equivalent treatments than people in the UK and Europe.
Recently, several major drug company projects in the UK have been delayed or cancelled, while multi-billion-dollar funding commitments have been pledged toward US facilities.
One official acknowledged that the NHS had to spend more on treatments, noting that its spending on drugs had declined as a proportion of its overall budget over the past decade.
