The United Kingdom and the United States have secured a significant bilateral deal that will guarantee no import taxes on UK drug products entering the American market.
Agreement Details of the Deal
In exchange for the tariff guarantee, the UK has committed to increase funding on pharmaceuticals through the public health system. This pledge secures that duties on these vital goods will be held at zero for a timeframe of 36 months.
This deal comes after recent threats to dramatically increase duties on patented pharmaceutical imports, with potential rates floated as high as double the cost.
"This arrangement with the Britain bolsters the worldwide climate for innovative medicines and brings long-overdue fairness to transatlantic medicine commerce," an announcement said.
Economic Significance
Pharmaceuticals are one of the the United Kingdom's most significant exports to the United States, which is by far the largest destination for large companies like GSK and AstraZeneca.
Trade data show that in the 12 months to the end of last September, the UK shipped pharmaceutical products worth £11.1bn to the US. This value represented 17.4% of all goods exports in that timeframe.
"This deal protects employment, stimulates investment and facilitates the UK to become a worldwide center for life sciences," the Business and Trade Secretary commented.
Detailed UK Commitments
The pact involves several key pledges from the UK:
- Price Threshold Increase: The UK will raise the price threshold at which it judges new treatments to be prohibitively costly by twenty-five percent.
- Boosted Medicine Funding: There is a goal to raise overall health service expenditure on treatments from 0.3% of the national economy to 0.6% over the following ten-year period.
- Rebate Cap: The sum drug companies must refund to the NHS to stay within budget will be limited at fifteen percent. Last year, repayments exceeded 20%.
Industry Background
The pact comes amid a ongoing tension between the drug companies and the UK government over drug pricing and regulatory access.
This friction were intensified by claims that American consumers were charged a premium for the same drugs than patients in the Britain and the EU.
In recent months, several large manufacturing plans in the UK have been delayed or scrapped, while major expansions have been directed toward projects in the United States.
The Science Minister stated that the NHS needed to spend more on treatments, noting that its expenditure on drugs had declined as a percentage of its overall budget over the previous ten-year period.
