Britain and America have hammered out a key bilateral deal that will keep no duties on UK drug exports entering the US market.
Key Provisions of the Accord
As part of the deal, the UK has pledged to increase funding on pharmaceuticals through the public health system. This move guarantees that tariffs on these crucial products will remain at zero for a timeframe of 36 months.
This development comes after recent statements to dramatically increase tariffs on branded pharmaceutical products, with increases mentioned up to double the cost.
"This agreement with the United Kingdom reinforces the global environment for cutting-edge drugs and establishes much-needed fairness to transatlantic drug exports," a release noted.
Trade Importance
Medicines are one of the the United Kingdom's largest exports to the United States, which is by far the biggest buyer for leading companies like GSK and AstraZeneca.
Trade data show that in the 12 months prior to the third quarter, the UK sold drugs totaling billions to the US. This figure represented a significant portion of British export trade in that period.
"This deal protects jobs, boosts capital expenditure and facilitates the UK to establish itself as a global hub for medical research," the Business and Trade Secretary remarked.
Key UK Commitments
The agreement includes several specific commitments from the British government:
- Price Threshold Increase: The UK will lift the cost ceiling at which it deems new therapies to be unaffordable by 25%.
- Increased NHS Spending: There is a goal to raise total NHS spending on drugs from 0.3% of GDP to 0.6 percent over the coming ten years.
- Rebate Cap: The percentage drug companies must refund to the NHS to control costs will be limited at fifteen percent. In the past, rebates were more than 20%.
Industry Background
The deal comes amid a long-running row between the pharmaceutical industry and the ministers over medicine costs and approval rates.
These tensions were intensified by arguments that US patients were paying several times more for the same drugs than people in the other developed nations.
In recent months, several major manufacturing plans in the UK have been halted or cancelled, while major investments have been pledged toward American operations.
One official acknowledged that the NHS had to invest a greater share on drugs, noting that its spending on drugs had shrunk as a share of its resources over the previous ten-year period.
