The UK and US have announced a major bilateral deal that will keep zero duties on British pharmaceutical shipments being sold in the American market.
Key Provisions of the Pact
As part of the deal, the UK has pledged to raise expenditure on medicines through the National Health Service (NHS). This move ensures that duties on these key goods will stay at zero for a period of three years.
This deal is in response to earlier threats to significantly raise duties on patented drug imports, with potential rates floated as high as double the cost.
"This arrangement with the United Kingdom reinforces the global environment for innovative medicines and brings much-needed balance to American-British pharmaceutical trade," a statement said.
Economic Importance
Drugs are one of the UK's largest goods shipped to the America, which is clearly the largest buyer for leading companies like GSK and AstraZeneca.
Trade data show that in the year to the end of last September, the UK sold drugs valued at over eleven billion pounds to the US. This figure made up a significant portion of British export trade in that period.
"This guarantee secures work, boosts capital expenditure and sets the stage for the UK to emerge as a global hub for life sciences," the Business and Trade Secretary stated.
Key British Pledges
The agreement entails several specific pledges from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the price threshold at which it judges new treatments to be unaffordable by a quarter.
- Boosted Medicine Funding: There is a aim to raise overall public funding on drugs from 0.3% of GDP to 0.6 percent over the coming ten years.
- Refund Ceiling: The sum drug companies must pay back to the NHS to stay within budget will be capped at 15%. In the past, refunds were more than twenty percent.
Industry Background
This agreement follows a long-running row between the sector and the UK government over medicine costs and regulatory access.
This friction were intensified by arguments that American consumers were charged several times more for the same drugs than consumers in the UK and Europe.
In recent months, several significant manufacturing plans in the UK have been delayed or cancelled, while multi-billion-dollar funding commitments have been announced toward US facilities.
One official publicly accepted that the NHS needed to increase expenditure on medicines, noting that its expenditure on drugs had shrunk as a percentage of its overall budget over the previous ten-year period.
