The UK and US have announced a key bilateral deal that will keep no import taxes on British drug products being sold in the US market.
Agreement Details of the Deal
In exchange for the tariff guarantee, the UK has pledged to raise expenditure on pharmaceuticals through the public health system. This move ensures that duties on these key exports will stay at zero for a duration of three years.
This agreement is in response to previous warnings to significantly raise tariffs on patented drug imports, with figures floated reaching 100%.
"This deal with the United Kingdom reinforces the worldwide climate for cutting-edge drugs and establishes much-needed equity to American-British drug exports," a statement noted.
Economic Significance
Pharmaceuticals are one of the UK's biggest goods shipped to the US, which is easily the largest buyer for large companies like GSK and AstraZeneca.
Export figures indicate that in the 12 months to the end of the third quarter, the UK sold pharmaceutical products valued at over eleven billion pounds to the US. This amount accounted for a significant portion of all goods exports in that timeframe.
"This guarantee safeguards employment, increases investment and paves the way for the UK to emerge as a global hub for biotech and pharma," the Business and Trade Secretary remarked.
Specific NHS Changes
The agreement includes several specific pledges from the UK:
- Price Threshold Increase: The UK will lift the price threshold at which it judges new therapies to be unaffordable by twenty-five percent.
- Boosted Medicine Funding: There is a target to double total public funding on treatments from 0.3 percent of the national economy to 0.6 percent over the following ten-year period.
- Payback Limit: The percentage drug companies must pay back to the NHS to control costs will be limited at 15%. Last year, rebates were more than 20%.
Industry Background
The deal follows a ongoing dispute between the drug companies and the ministers over medicine costs and approval rates.
The disagreement were exacerbated by claims that US patients were charged significantly more for the equivalent treatments than consumers in the Britain and the EU.
Recently, several large drug company projects in the UK have been paused or abandoned, while multi-billion-dollar funding commitments have been directed toward US facilities.
One official acknowledged that the NHS must invest a greater share on drugs, noting that its spending on drugs had decreased as a share of its overall budget over the past decade.
