The UK and US have announced a major bilateral deal that will keep no import taxes on British medicine shipments being sold in the US market.
The Terms of the Pact
In exchange for the tariff guarantee, the UK has committed to raise spending on medicines through the public health system. This commitment guarantees that duties on these key products will remain at nothing for a period of the next three years.
This deal is in response to earlier warnings to hike tariffs on branded pharmaceutical products, with potential rates floated reaching double the cost.
"This agreement between the United Kingdom strengthens the global environment for cutting-edge drugs and brings much-needed fairness to U.S.–U.K. drug exports," a release noted.
Commercial Significance
Drugs represent one of the Britain's biggest export categories to the United States, which is by far the biggest market for large British pharmaceutical firms.
Export figures indicate that in the one-year period leading up to September, the UK shipped medicines valued at billions to the US. This amount made up a significant portion of total UK exports in that timeframe.
"This agreement safeguards work, boosts capital expenditure and paves the way for the UK to establish itself as a worldwide center for medical research," the Business and Trade Secretary remarked.
Key NHS Changes
The deal entails several specific pledges from the UK:
- Higher Cost Ceiling: The UK will increase the cost ceiling at which it considers new therapies to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a target to increase total NHS spending on treatments from 0.3% of GDP to 0.6% over the following ten-year period.
- Rebate Cap: The percentage pharmaceutical firms must refund to the NHS to prevent overspending will be limited at fifteen percent. Last year, refunds topped 20%.
Broader Context
The pact comes amid a protracted tension between the pharmaceutical industry and the ministers over spending levels and approval rates.
These tensions were exacerbated by claims that US consumers were paying significantly more for the same drugs than consumers in the other developed nations.
Over the last 18 months, several large drug company projects in the UK have been halted or abandoned, while substantial expansions have been directed toward US facilities.
The Science Minister stated that the NHS had to invest a greater share on drugs, noting that its spending on drugs had declined as a proportion of its resources over the previous ten-year period.
