Britain and America have finalized a key trade agreement that will keep zero import taxes on British drug shipments going into the American market.
The Terms of the Deal
As part of the deal, the UK has committed to boost expenditure on medicines through the public health system. This pledge ensures that duties on these crucial products will stay at nothing for a timeframe of the next three years.
This agreement is in response to previous warnings to dramatically increase import taxes on branded pharmaceutical products, with increases mentioned up to one hundred percent.
"This deal with the Britain bolsters the international landscape for new treatments and introduces long-overdue balance to U.S.–U.K. pharmaceutical trade," a statement said.
Commercial Importance
Drugs constitute one of the UK's most significant goods shipped to the US, which is clearly the largest destination for large UK drugmakers.
Trade data show that in the 12 months to the end of September, the UK exported medicines totaling billions to the US. This value represented 17.4% of total UK exports in that span.
"This agreement safeguards work, increases funding and paves the way for the UK to emerge as a global hub for life sciences," a government official stated.
Key NHS Changes
The deal includes several specific changes from the British government:
- Revised Affordability Limit: The UK will raise the affordability limit at which it deems new therapies to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a target to double total NHS spending on drugs from 0.3% of the national economy to 0.6 percent over the next decade.
- Refund Ceiling: The percentage drug companies must pay back to the NHS to stay within budget will be limited at 15%. Last year, rebates exceeded twenty percent.
Industry Background
The deal follows a ongoing tension between the drug companies and the ministers over spending levels and regulatory access.
This friction were heightened by claims that American customers were charged a premium for the same drugs than people in the UK and Europe.
Recently, several significant pharmaceutical investments in the UK have been delayed or scrapped, while multi-billion-dollar funding commitments have been announced toward US facilities.
The Science Minister acknowledged that the NHS needed to spend more on medicines, noting that its spending on drugs had shrunk as a percentage of its resources over the last ten years.
