The United Kingdom and the United States have concluded a landmark bilateral deal that will ensure no tariffs on British medicine exports entering the US market.
The Terms of the Pact
As part of the deal, the UK has agreed to raise expenditure on pharmaceuticals through the National Health Service (NHS). This move ensures that import taxes on these key goods will remain at nothing for a duration of the next three years.
This agreement follows previous threats to significantly raise import taxes on branded pharmaceutical imports, with potential rates floated as high as 100%.
"This agreement with the UK reinforces the worldwide climate for new treatments and brings much-needed equity to American-British pharmaceutical trade," a release noted.
Economic Importance
Pharmaceuticals constitute one of the the United Kingdom's biggest exports to the US, which is by far the biggest market for major UK drugmakers.
Statistics reveal that in the one-year period to the end of last September, the UK exported pharmaceutical products worth over eleven billion pounds to the US. This value represented 17.4% of total UK exports in that span.
"This guarantee safeguards work, boosts funding and paves the way for the UK to emerge as a international leader for medical research," a minister stated.
Key NHS Changes
The deal entails several specific changes from the UK:
- Higher Cost Ceiling: The UK will lift the cost ceiling at which it considers new therapies to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a aim to double overall public funding on treatments from 0.3 percent of the national economy to 0.6% over the coming ten years.
- Payback Limit: The percentage pharmaceutical firms must refund to the NHS to control costs will be capped at 15%. Last year, repayments exceeded 20%.
Industry Background
The pact follows a long-running tension between the drug companies and the British authorities over spending levels and approval rates.
This friction were exacerbated by claims that US consumers were paying significantly more for the same drugs than consumers in the Britain and the EU.
Recently, several large manufacturing plans in the UK have been halted or abandoned, while major investments have been pledged toward US facilities.
The Science Minister publicly accepted that the NHS needed to invest a greater share on treatments, noting that its budget allocation on drugs had decreased as a proportion of its resources over the last ten years.
