The UK and US have hammered out a major commercial pact that will keep zero import taxes on UK medicine exports going into the American market.
Key Provisions of the Deal
Under the terms of the agreement, the UK has pledged to raise spending on drugs through the NHS. This pledge secures that duties on these vital exports will be held at zero for a timeframe of 36 months.
This deal comes after earlier threats to hike import taxes on patented pharmaceutical products, with increases discussed reaching one hundred percent.
"This deal between the United Kingdom bolsters the international landscape for cutting-edge drugs and brings much-needed fairness to American-British pharmaceutical trade," a release noted.
Commercial Impact
Drugs constitute one of the Britain's largest exports to the America, which is clearly the biggest destination for large British pharmaceutical firms.
Trade data show that in the one-year period leading up to September, the UK shipped drugs valued at £11.1bn to the US. This amount represented a significant portion of total UK exports in that timeframe.
"This guarantee protects work, boosts capital expenditure and sets the stage for the UK to emerge as a international leader for life sciences," the Business and Trade Secretary commented.
Detailed NHS Changes
The agreement entails several key pledges from the UK:
- Higher Cost Ceiling: The UK will raise the affordability limit at which it considers new treatments to be unaffordable by a quarter.
- Increased NHS Spending: There is a goal to double overall public funding on drugs from 0.3 percent of Gross Domestic Product to 0.6% over the next decade.
- Refund Ceiling: The amount drug companies must refund to the NHS to stay within budget will be restricted at fifteen percent. In the past, refunds exceeded twenty percent.
Broader Context
The deal takes place against a ongoing dispute between the drug companies and the UK government over medicine costs and regulatory access.
The disagreement were exacerbated by claims that American patients were charged a premium for the same drugs than consumers in the UK and Europe.
In recent months, several significant drug company projects in the UK have been delayed or cancelled, while major expansions have been directed toward projects in the United States.
The Science Minister publicly accepted that the NHS must spend more on drugs, noting that its spending on drugs had shrunk as a share of its overall budget over the last ten years.
