Britain and America have forged a significant commercial pact that will ensure zero import taxes on UK medicine exports being sold in the US market.
The Terms of the Pact
In exchange for the tariff guarantee, the UK has agreed to raise spending on pharmaceuticals through the public health system. This move secures that duties on these key products will remain at nothing for a timeframe of the next three years.
This deal comes after recent statements to dramatically increase import taxes on patented pharmaceutical imports, with increases floated up to double the cost.
"This deal with the Britain strengthens the worldwide climate for innovative medicines and establishes long-overdue balance to American-British medicine commerce," a statement said.
Commercial Impact
Drugs represent one of the the United Kingdom's largest export categories to the US, which is by far the primary buyer for leading British pharmaceutical firms.
Trade data indicate that in the 12 months prior to the third quarter, the UK shipped medicines totaling over eleven billion pounds to the US. This amount made up a significant portion of British export trade in that period.
"This guarantee protects employment, boosts funding and paves the way for the UK to emerge as a worldwide center for biotech and pharma," the Business and Trade Secretary commented.
Key British Pledges
The agreement involves several key pledges from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the affordability limit at which it deems new treatments to be unaffordable by a quarter.
- Higher Drug Budget: There is a goal to raise total health service expenditure on medicines from 0.3 percent of GDP to 0.6% over the coming ten years.
- Payback Limit: The percentage drug companies must refund to the NHS to prevent overspending will be capped at fifteen percent. Previously, refunds topped twenty percent.
Broader Context
This agreement follows a ongoing row between the drug companies and the ministers over medicine costs and approval rates.
The disagreement were heightened by claims that US patients were paying significantly more for the equivalent treatments than people in the UK and Europe.
Recently, several major manufacturing plans in the UK have been delayed or scrapped, while multi-billion-dollar investments have been announced toward US facilities.
A senior figure stated that the NHS had to increase expenditure on medicines, noting that its spending on drugs had decreased as a proportion of its resources over the past decade.
