The UK and US have hammered out a landmark bilateral deal that will guarantee no import taxes on UK medicine exports being sold in the American market.
Key Provisions of the Deal
In exchange for the tariff guarantee, the UK has committed to raise expenditure on pharmaceuticals through the public health system. This commitment ensures that import taxes on these crucial products will stay at nothing for a period of 36 months.
This development is in response to recent warnings to hike tariffs on patented drug imports, with potential rates floated as high as double the cost.
"This arrangement between the Britain reinforces the international landscape for cutting-edge drugs and introduces much-needed fairness to transatlantic pharmaceutical trade," an announcement said.
Trade Importance
Drugs represent one of the UK's largest goods shipped to the US, which is by far the largest destination for large companies like GSK and AstraZeneca.
Statistics reveal that in the one-year period leading up to last September, the UK exported drugs totaling billions to the US. This amount accounted for nearly one-fifth of total UK exports in that period.
"This agreement protects jobs, boosts funding and paves the way for the UK to emerge as a global hub for biotech and pharma," a government official remarked.
Specific UK Commitments
The deal involves several specific changes from the UK:
- Revised Affordability Limit: The UK will lift the cost ceiling at which it deems new therapies to be unaffordable by a quarter.
- Increased NHS Spending: There is a target to increase overall public funding on treatments from 0.3 percent of the national economy to 0.6% over the following ten-year period.
- Payback Limit: The percentage drug companies must refund to the NHS to prevent overspending will be capped at 15%. Last year, refunds topped twenty percent.
Industry Background
This agreement comes amid a protracted dispute between the sector and the UK government over drug pricing and approval rates.
These tensions were exacerbated by arguments that American customers were charged several times more for the equivalent treatments than people in the Britain and the EU.
Over the last 18 months, several major drug company projects in the UK have been delayed or abandoned, while major funding commitments have been pledged toward projects in the United States.
A senior figure stated that the NHS had to increase expenditure on medicines, noting that its budget allocation on drugs had shrunk as a percentage of its resources over the last ten years.
