The United Kingdom and the United States have concluded a important trade agreement that will keep zero import taxes on British drug exports being sold in the American market.
The Terms of the Deal
Under the terms of the agreement, the UK has committed to raise expenditure on drugs through the NHS. This pledge secures that duties on these key exports will be held at zero for a period of the next three years.
This agreement is in response to previous statements to dramatically increase import taxes on branded drug imports, with potential rates mentioned as high as double the cost.
"This arrangement with the Britain strengthens the worldwide climate for innovative medicines and introduces long-overdue balance to American-British pharmaceutical trade," a release noted.
Commercial Importance
Drugs represent one of the the United Kingdom's most significant export categories to the US, which is easily the primary buyer for major companies like GSK and AstraZeneca.
Trade data reveal that in the year to the end of the third quarter, the UK exported medicines valued at £11.1bn to the US. This value represented a significant portion of all goods exports in that timeframe.
"This deal secures work, increases investment and paves the way for the UK to emerge as a international leader for medical research," the Business and Trade Secretary commented.
Specific UK Commitments
The agreement involves several notable changes from the UK:
- Higher Cost Ceiling: The UK will lift the cost ceiling at which it considers new treatments to be unaffordable by 25%.
- Increased NHS Spending: There is a target to double overall public funding on drugs from 0.3 percent of Gross Domestic Product to 0.6 percent over the coming ten years.
- Payback Limit: The percentage manufacturers must return to the NHS to prevent overspending will be capped at fifteen percent. Previously, repayments were more than 20%.
Broader Context
This agreement comes amid a ongoing dispute between the drug companies and the ministers over spending levels and NHS adoption.
The disagreement were intensified by assertions that US patients were paying a premium for the equivalent treatments than people in the Britain and the EU.
In recent months, several significant drug company projects in the UK have been delayed or cancelled, while multi-billion-dollar funding commitments have been announced toward US facilities.
The Science Minister acknowledged that the NHS must spend more on medicines, noting that its expenditure on drugs had declined as a proportion of its overall budget over the past decade.
