The UK and US have concluded a key trade agreement that will guarantee zero import taxes on British drug exports entering the US market.
Agreement Details of the Deal
In exchange for the tariff guarantee, the UK has committed to increase spending on pharmaceuticals through the public health system. This pledge guarantees that tariffs on these vital exports will be held at zero for a period of the next three years.
This agreement comes after recent threats to dramatically increase tariffs on branded pharmaceutical imports, with figures floated up to double the cost.
"This deal with the UK bolsters the global environment for cutting-edge drugs and introduces much-needed balance to U.S.–U.K. pharmaceutical trade," an announcement said.
Commercial Importance
Pharmaceuticals represent one of the the United Kingdom's most significant exports to the America, which is by far the primary destination for major UK drugmakers.
Export figures indicate that in the one-year period to the end of the third quarter, the UK sold medicines valued at over eleven billion pounds to the US. This amount represented 17.4% of total UK exports in that timeframe.
"This guarantee protects jobs, increases funding and sets the stage for the UK to emerge as a global hub for life sciences," the Business and Trade Secretary remarked.
Key NHS Changes
The deal includes several specific commitments from the United Kingdom:
- Revised Affordability Limit: The UK will raise the price threshold at which it considers new treatments to be unaffordable by 25%.
- Higher Drug Budget: There is a aim to raise total NHS spending on medicines from 0.3 percent of Gross Domestic Product to 0.6% over the following ten-year period.
- Payback Limit: The amount manufacturers must return to the NHS to control costs will be capped at fifteen percent. In the past, repayments were more than 20%.
Industry Background
The deal comes amid a long-running dispute between the sector and the UK government over medicine costs and approval rates.
These tensions were heightened by assertions that American customers were paying a premium for the same drugs than patients in the other developed nations.
Recently, several large pharmaceutical investments in the UK have been halted or cancelled, while major expansions have been announced toward US facilities.
The Science Minister publicly accepted that the NHS needed to spend more on medicines, noting that its spending on drugs had shrunk as a proportion of its overall budget over the previous ten-year period.
