The United Kingdom and the United States have announced a key bilateral deal that will ensure zero import taxes on UK drug shipments entering the American market.
Agreement Details of the Deal
As part of the deal, the UK has pledged to increase spending on medicines through the public health system. This move guarantees that tariffs on these key exports will stay at zero for a period of 36 months.
This agreement comes after recent threats to significantly raise duties on branded pharmaceutical products, with increases discussed as high as double the cost.
"This arrangement with the UK bolsters the worldwide climate for innovative medicines and introduces much-needed equity to American-British medicine commerce," a release said.
Commercial Significance
Medicines represent one of the UK's biggest goods shipped to the United States, which is easily the largest market for major companies like GSK and AstraZeneca.
Trade data show that in the one-year period leading up to the third quarter, the UK sold pharmaceutical products totaling £11.1bn to the US. This figure represented 17.4% of total UK exports in that span.
"This agreement protects jobs, increases investment and facilitates the UK to establish itself as a worldwide center for medical research," a government official commented.
Specific UK Commitments
The agreement entails several specific pledges from the British government:
- Revised Affordability Limit: The UK will lift the affordability limit at which it considers new medicines to be too expensive by a quarter.
- Increased NHS Spending: There is a goal to raise total public funding on treatments from 0.3% of GDP to 0.6% over the coming ten years.
- Refund Ceiling: The sum drug companies must pay back to the NHS to control costs will be restricted at fifteen percent. In the past, rebates topped twenty percent.
Recent Tensions
The deal takes place against a long-running dispute between the drug companies and the British authorities over spending levels and approval rates.
The disagreement were intensified by claims that US consumers were paying several times more for the same drugs than people in the Britain and the EU.
Recently, several significant pharmaceutical investments in the UK have been halted or abandoned, while multi-billion-dollar investments have been directed toward US facilities.
A senior figure stated that the NHS had to invest a greater share on medicines, noting that its expenditure on drugs had decreased as a proportion of its overall budget over the previous ten-year period.
