The UK and US have reached a landmark commercial pact that will ensure zero tariffs on British pharmaceutical products going into the US market.
The Terms of the Pact
Under the terms of the agreement, the UK has committed to boost funding on medicines through the public health system. This move secures that duties on these crucial goods will stay at nothing for a period of 36 months.
This agreement is in response to earlier warnings to hike import taxes on branded drug products, with potential rates floated as high as one hundred percent.
"This arrangement between the United Kingdom bolsters the worldwide climate for cutting-edge drugs and brings long-overdue fairness to American-British pharmaceutical trade," a statement said.
Trade Impact
Drugs represent one of the the United Kingdom's biggest exports to the United States, which is by far the biggest buyer for large companies like GSK and AstraZeneca.
Trade data reveal that in the one-year period prior to the third quarter, the UK shipped pharmaceutical products worth £11.1bn to the US. This figure represented a significant portion of British export trade in that period.
"This deal protects work, boosts capital expenditure and sets the stage for the UK to become a worldwide center for biotech and pharma," the Business and Trade Secretary remarked.
Detailed British Pledges
The deal includes several key commitments from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the affordability limit at which it deems new treatments to be too expensive by 25%.
- Increased NHS Spending: There is a aim to raise overall public funding on drugs from 0.3 percent of GDP to 0.6% over the coming ten years.
- Rebate Cap: The percentage drug companies must refund to the NHS to stay within budget will be capped at fifteen percent. In the past, repayments were more than 20%.
Industry Background
The deal comes amid a ongoing row between the pharmaceutical industry and the ministers over medicine costs and regulatory access.
This friction were heightened by claims that US patients were charged significantly more for the identical medicines than people in the UK and Europe.
Over the last 18 months, several large drug company projects in the UK have been delayed or scrapped, while multi-billion-dollar expansions have been pledged toward US facilities.
A senior figure publicly accepted that the NHS had to spend more on treatments, noting that its budget allocation on drugs had declined as a proportion of its overall budget over the previous ten-year period.
