The UK and US have announced a landmark commercial pact that will ensure zero tariffs on UK pharmaceutical shipments going into the American market.
The Terms of the Pact
As part of the deal, the UK has pledged to raise spending on medicines through the NHS. This move guarantees that tariffs on these vital products will be held at zero for a period of the next three years.
This agreement is in response to recent statements to dramatically increase duties on patented drug products, with increases floated as high as one hundred percent.
"This deal with the United Kingdom strengthens the global environment for innovative medicines and brings long-overdue fairness to American-British medicine commerce," a release declared.
Economic Importance
Medicines represent one of the the United Kingdom's biggest exports to the US, which is by far the biggest buyer for major UK drugmakers.
Trade data reveal that in the year leading up to September, the UK sold medicines totaling over eleven billion pounds to the US. This amount accounted for nearly one-fifth of British export trade in that period.
"This agreement secures employment, increases investment and paves the way for the UK to establish itself as a worldwide center for medical research," the Business and Trade Secretary remarked.
Specific British Pledges
The pact includes several key changes from the British government:
- Price Threshold Increase: The UK will increase the cost ceiling at which it deems new therapies to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a goal to double overall NHS spending on medicines from 0.3 percent of GDP to 0.6% over the following ten-year period.
- Payback Limit: The percentage pharmaceutical firms must pay back to the NHS to prevent overspending will be limited at 15%. Last year, refunds exceeded twenty percent.
Industry Background
This agreement comes amid a long-running tension between the sector and the UK government over medicine costs and regulatory access.
This friction were heightened by claims that American patients were paying significantly more for the equivalent treatments than people in the UK and Europe.
Over the last 18 months, several major drug company projects in the UK have been halted or cancelled, while major funding commitments have been announced toward projects in the United States.
The Science Minister publicly accepted that the NHS must invest a greater share on drugs, noting that its spending on drugs had shrunk as a proportion of its resources over the past decade.
