The UK and US have announced a significant bilateral deal that will maintain zero duties on British medicine shipments entering the American market.
The Terms of the Deal
As part of the deal, the UK has pledged to boost funding on pharmaceuticals through the public health system. This move ensures that tariffs on these key products will be held at nothing for a duration of three years.
This deal follows previous statements to hike import taxes on patented pharmaceutical products, with increases floated reaching double the cost.
"This deal with the UK strengthens the global environment for new treatments and establishes much-needed fairness to U.S.–U.K. pharmaceutical trade," an announcement said.
Trade Impact
Drugs constitute one of the Britain's most significant goods shipped to the United States, which is by far the biggest market for leading UK drugmakers.
Export figures reveal that in the 12 months leading up to last September, the UK shipped medicines worth £11.1bn to the US. This amount made up a significant portion of all goods exports in that span.
"This agreement protects jobs, increases investment and paves the way for the UK to establish itself as a worldwide center for medical research," a minister remarked.
Key UK Commitments
The pact entails several key pledges from the British government:
- Price Threshold Increase: The UK will lift the cost ceiling at which it deems new medicines to be unaffordable by a quarter.
- Increased NHS Spending: There is a goal to raise total NHS spending on medicines from 0.3% of GDP to 0.6% over the coming ten years.
- Rebate Cap: The amount manufacturers must pay back to the NHS to control costs will be limited at fifteen percent. Last year, rebates exceeded 20%.
Broader Context
The deal takes place against a long-running dispute between the drug companies and the ministers over spending levels and NHS adoption.
These tensions were exacerbated by claims that American customers were charged significantly more for the equivalent treatments than consumers in the Britain and the EU.
Over the last 18 months, several major drug company projects in the UK have been delayed or cancelled, while major investments have been pledged toward projects in the United States.
A senior figure publicly accepted that the NHS must spend more on treatments, noting that its budget allocation on drugs had decreased as a share of its overall budget over the last ten years.
