The UK and US have announced a important trade agreement that will guarantee zero tariffs on UK pharmaceutical shipments being sold in the US market.
Key Provisions of the Pact
In exchange for the tariff guarantee, the UK has pledged to increase funding on pharmaceuticals through the NHS. This commitment guarantees that import taxes on these key goods will remain at nothing for a duration of three years.
This agreement follows recent threats to significantly raise import taxes on branded drug imports, with figures floated up to 100%.
"This arrangement with the United Kingdom bolsters the worldwide climate for new treatments and introduces long-overdue equity to American-British pharmaceutical trade," a release said.
Trade Importance
Pharmaceuticals are one of the Britain's most significant exports to the US, which is clearly the primary market for large UK drugmakers.
Statistics indicate that in the one-year period to the end of September, the UK exported drugs valued at billions to the US. This amount accounted for nearly one-fifth of British export trade in that period.
"This guarantee protects jobs, stimulates capital expenditure and facilitates the UK to become a international leader for biotech and pharma," a government official stated.
Key British Pledges
The deal involves several key pledges from the British government:
- Revised Affordability Limit: The UK will increase the price threshold at which it judges new therapies to be prohibitively costly by 25%.
- Increased NHS Spending: There is a aim to increase total health service expenditure on medicines from 0.3% of Gross Domestic Product to 0.6% over the next decade.
- Refund Ceiling: The amount drug companies must return to the NHS to control costs will be capped at 15%. In the past, rebates exceeded 20%.
Recent Tensions
The pact follows a protracted tension between the drug companies and the ministers over drug pricing and NHS adoption.
The disagreement were heightened by claims that American patients were charged significantly more for the equivalent treatments than patients in the other developed nations.
Recently, several major pharmaceutical investments in the UK have been delayed or scrapped, while multi-billion-dollar investments have been announced toward American operations.
One official publicly accepted that the NHS needed to invest a greater share on medicines, noting that its budget allocation on drugs had decreased as a percentage of its overall budget over the past decade.
