The UK and US have signed a key trade agreement that will ensure no duties on UK medicine exports entering the US market.
The Terms of the Deal
As part of the deal, the UK has committed to boost spending on drugs through the National Health Service (NHS). This move secures that import taxes on these key goods will be held at zero for a duration of three years.
This deal is in response to recent statements to hike duties on branded drug products, with potential rates discussed up to double the cost.
"This deal between the Britain reinforces the global environment for innovative medicines and brings much-needed equity to U.S.–U.K. drug exports," a statement noted.
Commercial Significance
Pharmaceuticals constitute one of the the United Kingdom's largest exports to the US, which is clearly the primary market for major UK drugmakers.
Export figures reveal that in the 12 months prior to the third quarter, the UK exported pharmaceutical products worth over eleven billion pounds to the US. This amount represented a significant portion of British export trade in that period.
"This agreement secures employment, stimulates funding and facilitates the UK to emerge as a international leader for biotech and pharma," the Business and Trade Secretary commented.
Specific NHS Changes
The agreement involves several key changes from the UK:
- Higher Cost Ceiling: The UK will increase the cost ceiling at which it considers new treatments to be unaffordable by 25%.
- Boosted Medicine Funding: There is a goal to double overall health service expenditure on treatments from 0.3% of the national economy to 0.6% over the next decade.
- Refund Ceiling: The sum manufacturers must return to the NHS to stay within budget will be limited at fifteen percent. Last year, refunds exceeded twenty percent.
Recent Tensions
The pact comes amid a protracted dispute between the drug companies and the British authorities over medicine costs and NHS adoption.
These tensions were exacerbated by arguments that US customers were paying several times more for the identical medicines than consumers in the Britain and the EU.
Recently, several major drug company projects in the UK have been paused or scrapped, while substantial investments have been directed toward American operations.
One official stated that the NHS needed to increase expenditure on medicines, noting that its expenditure on drugs had decreased as a percentage of its total funding over the past decade.
