The United Kingdom and the United States have reached a landmark trade agreement that will keep no duties on UK drug shipments being sold in the US market.
Agreement Details of the Deal
Under the terms of the agreement, the UK has pledged to raise expenditure on medicines through the National Health Service (NHS). This commitment secures that import taxes on these key goods will be held at nothing for a duration of three years.
This development is in response to earlier statements to significantly raise tariffs on branded pharmaceutical products, with increases floated as high as double the cost.
"This arrangement between the Britain bolsters the global environment for new treatments and establishes long-overdue equity to U.S.–U.K. pharmaceutical trade," a statement said.
Economic Impact
Pharmaceuticals represent one of the Britain's biggest export categories to the America, which is easily the biggest buyer for leading UK drugmakers.
Statistics reveal that in the 12 months prior to the third quarter, the UK exported pharmaceutical products totaling over eleven billion pounds to the US. This figure accounted for nearly one-fifth of all goods exports in that span.
"This deal protects work, stimulates funding and facilitates the UK to become a global hub for life sciences," the Business and Trade Secretary remarked.
Specific UK Commitments
The agreement involves several notable commitments from the British government:
- Price Threshold Increase: The UK will increase the price threshold at which it deems new treatments to be too expensive by 25%.
- Increased NHS Spending: There is a target to raise overall health service expenditure on drugs from 0.3 percent of Gross Domestic Product to 0.6 percent over the next decade.
- Rebate Cap: The percentage drug companies must return to the NHS to prevent overspending will be restricted at 15%. Last year, refunds exceeded twenty percent.
Industry Background
The deal comes amid a ongoing row between the pharmaceutical industry and the British authorities over drug pricing and NHS adoption.
These tensions were intensified by arguments that US consumers were paying several times more for the identical medicines than consumers in the UK and Europe.
In recent months, several major manufacturing plans in the UK have been halted or abandoned, while multi-billion-dollar investments have been announced toward projects in the United States.
The Science Minister stated that the NHS must invest a greater share on medicines, noting that its expenditure on drugs had decreased as a proportion of its total funding over the last ten years.
