The UK and US have signed a key trade agreement that will maintain zero tariffs on UK pharmaceutical exports entering the American market.
Agreement Details of the Accord
In exchange for the tariff guarantee, the UK has pledged to increase funding on drugs through the National Health Service (NHS). This move ensures that import taxes on these crucial exports will remain at nothing for a duration of the next three years.
This agreement follows recent statements to hike duties on patented drug imports, with figures discussed reaching double the cost.
"This agreement with the Britain strengthens the global environment for new treatments and brings much-needed balance to transatlantic pharmaceutical trade," a statement noted.
Economic Importance
Drugs represent one of the Britain's largest export categories to the US, which is easily the largest buyer for large UK drugmakers.
Export figures reveal that in the 12 months to the end of September, the UK sold medicines totaling over eleven billion pounds to the US. This amount represented nearly one-fifth of all goods exports in that timeframe.
"This deal safeguards work, boosts funding and sets the stage for the UK to become a worldwide center for biotech and pharma," the Business and Trade Secretary commented.
Key NHS Changes
The deal includes several notable changes from the United Kingdom:
- Revised Affordability Limit: The UK will lift the price threshold at which it considers new medicines to be too expensive by 25%.
- Higher Drug Budget: There is a goal to increase total NHS spending on drugs from 0.3% of the national economy to 0.6 percent over the coming ten years.
- Payback Limit: The amount drug companies must refund to the NHS to stay within budget will be restricted at 15%. In the past, rebates were more than twenty percent.
Industry Background
The pact follows a protracted tension between the pharmaceutical industry and the British authorities over drug pricing and approval rates.
The disagreement were intensified by claims that US consumers were paying a premium for the equivalent treatments than consumers in the UK and Europe.
Recently, several major manufacturing plans in the UK have been delayed or scrapped, while substantial expansions have been announced toward US facilities.
One official publicly accepted that the NHS must increase expenditure on drugs, noting that its budget allocation on drugs had decreased as a share of its total funding over the past decade.
