Britain and America have secured a landmark trade agreement that will keep zero import taxes on British drug shipments going into the US market.
The Terms of the Deal
In exchange for the tariff guarantee, the UK has agreed to increase spending on drugs through the NHS. This move ensures that tariffs on these key goods will stay at nothing for a period of 36 months.
This development comes after earlier statements to significantly raise import taxes on patented pharmaceutical imports, with potential rates discussed reaching 100%.
"This arrangement between the UK reinforces the worldwide climate for cutting-edge drugs and brings much-needed equity to U.S.–U.K. medicine commerce," a release noted.
Trade Significance
Medicines constitute one of the the United Kingdom's biggest export categories to the US, which is easily the biggest market for leading UK drugmakers.
Trade data reveal that in the 12 months prior to the third quarter, the UK sold pharmaceutical products worth over eleven billion pounds to the US. This amount represented a significant portion of total UK exports in that span.
"This deal secures work, increases investment and facilitates the UK to establish itself as a global hub for life sciences," the Business and Trade Secretary commented.
Key UK Commitments
The deal involves several notable changes from the UK:
- Price Threshold Increase: The UK will raise the cost ceiling at which it deems new therapies to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a target to double total health service expenditure on treatments from 0.3% of GDP to 0.6% over the following ten-year period.
- Payback Limit: The percentage pharmaceutical firms must pay back to the NHS to control costs will be capped at 15%. Last year, rebates were more than twenty percent.
Industry Background
This agreement comes amid a long-running row between the sector and the ministers over drug pricing and regulatory access.
This friction were heightened by assertions that American customers were charged significantly more for the same drugs than people in the Britain and the EU.
Recently, several significant manufacturing plans in the UK have been delayed or cancelled, while major funding commitments have been announced toward American operations.
The Science Minister acknowledged that the NHS must spend more on drugs, noting that its spending on drugs had declined as a proportion of its overall budget over the last ten years.
