The United Kingdom and the United States have established a major bilateral deal that will preserve zero tariffs on British drug products being sold in the US market.
Key Provisions of the Deal
As part of the deal, the UK has committed to increase expenditure on medicines through the NHS. This pledge ensures that duties on these key goods will stay at nothing for a period of the next three years.
This agreement comes after recent statements to hike duties on patented pharmaceutical imports, with potential rates mentioned as high as double the cost.
"This agreement with the UK bolsters the worldwide climate for innovative medicines and introduces long-overdue equity to U.S.–U.K. drug exports," a statement declared.
Commercial Significance
Drugs represent one of the the United Kingdom's largest goods shipped to the United States, which is by far the biggest destination for leading UK drugmakers.
Statistics show that in the year to the end of the third quarter, the UK exported pharmaceutical products worth over eleven billion pounds to the US. This figure made up 17.4% of British export trade in that timeframe.
"This agreement safeguards jobs, increases investment and sets the stage for the UK to become a international leader for medical research," the Business and Trade Secretary remarked.
Specific UK Commitments
The agreement entails several key pledges from the United Kingdom:
- Price Threshold Increase: The UK will increase the price threshold at which it considers new therapies to be too expensive by a quarter.
- Increased NHS Spending: There is a target to raise total NHS spending on medicines from 0.3 percent of GDP to 0.6 percent over the next decade.
- Payback Limit: The percentage manufacturers must refund to the NHS to control costs will be restricted at fifteen percent. Last year, rebates were more than twenty percent.
Industry Background
The pact comes amid a ongoing dispute between the sector and the UK government over drug pricing and approval rates.
These tensions were intensified by assertions that US customers were charged significantly more for the equivalent treatments than consumers in the UK and Europe.
Recently, several major manufacturing plans in the UK have been halted or abandoned, while major funding commitments have been announced toward projects in the United States.
A senior figure acknowledged that the NHS must spend more on drugs, noting that its spending on drugs had decreased as a proportion of its total funding over the last ten years.
