Britain and America have established a major commercial pact that will guarantee no tariffs on UK drug products being sold in the US market.
The Terms of the Deal
As part of the deal, the UK has committed to increase spending on drugs through the NHS. This move guarantees that import taxes on these crucial goods will be held at zero for a period of three years.
This development is in response to recent warnings to dramatically increase import taxes on patented drug imports, with potential rates floated reaching 100%.
"This deal with the Britain reinforces the worldwide climate for innovative medicines and establishes much-needed fairness to transatlantic pharmaceutical trade," a release said.
Economic Significance
Pharmaceuticals represent one of the the United Kingdom's largest export categories to the America, which is by far the largest destination for large UK drugmakers.
Trade data reveal that in the 12 months to the end of September, the UK sold pharmaceutical products valued at over eleven billion pounds to the US. This amount accounted for 17.4% of British export trade in that timeframe.
"This deal protects jobs, stimulates capital expenditure and facilitates the UK to emerge as a international leader for life sciences," the Business and Trade Secretary remarked.
Key British Pledges
The pact entails several key commitments from the UK:
- Price Threshold Increase: The UK will increase the affordability limit at which it judges new therapies to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a target to increase total NHS spending on treatments from 0.3% of GDP to 0.6 percent over the next decade.
- Refund Ceiling: The sum drug companies must refund to the NHS to control costs will be limited at 15%. Last year, rebates exceeded 20%.
Recent Tensions
This agreement takes place against a ongoing tension between the drug companies and the British authorities over drug pricing and NHS adoption.
The disagreement were heightened by claims that US customers were charged a premium for the same drugs than patients in the Britain and the EU.
Recently, several major drug company projects in the UK have been paused or cancelled, while substantial funding commitments have been pledged 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 overall budget over the last ten years.
