The United Kingdom and the United States have hammered out a landmark bilateral deal that will keep zero import taxes on UK drug products entering the US market.
The Terms of the Pact
Under the terms of the agreement, the UK has committed to increase expenditure on drugs through the public health system. This commitment guarantees that tariffs on these crucial products will be held at nothing for a duration of 36 months.
This development follows recent threats to hike duties on patented pharmaceutical imports, with figures mentioned up to one hundred percent.
"This agreement with the Britain reinforces the global environment for new treatments and introduces long-overdue balance to American-British medicine commerce," an announcement declared.
Trade Significance
Medicines represent one of the Britain's most significant goods shipped to the United States, which is by far the biggest buyer for major companies like GSK and AstraZeneca.
Trade data show that in the year to the end of the third quarter, the UK shipped medicines worth over eleven billion pounds to the US. This figure made up 17.4% of British export trade in that timeframe.
"This guarantee protects employment, boosts investment and facilitates the UK to become a worldwide center for biotech and pharma," the Business and Trade Secretary remarked.
Detailed UK Commitments
The agreement includes several specific changes from the United Kingdom:
- Price Threshold Increase: The UK will lift the price threshold at which it considers new therapies to be prohibitively costly by 25%.
- Higher Drug Budget: There is a target to raise overall NHS spending on treatments from 0.3 percent of GDP to 0.6% over the next decade.
- Payback Limit: The sum drug companies must refund to the NHS to control costs will be limited at 15%. In the past, refunds were more than twenty percent.
Industry Background
The pact follows a ongoing row between the drug companies and the ministers over drug pricing and approval rates.
This friction were exacerbated by assertions that American patients were charged significantly more for the same drugs than people in the UK and Europe.
Over the last 18 months, several significant drug company projects in the UK have been delayed or cancelled, while substantial expansions have been directed toward projects in the United States.
One official acknowledged that the NHS had to invest a greater share on medicines, noting that its expenditure on drugs had shrunk as a proportion of its resources over the past decade.
