The UK and US have announced a important trade agreement that will maintain no levies on UK drug shipments going into the US market.
The Terms of the Deal
Under the terms of the agreement, the UK has agreed to boost spending on drugs through the public health system. This pledge secures that import taxes on these crucial goods will stay at zero for a period of 36 months.
This agreement follows recent warnings to dramatically increase duties on branded drug imports, with potential rates floated as high as 100%.
"This agreement between the UK bolsters the international landscape for cutting-edge drugs and brings long-overdue equity to U.S.–U.K. drug exports," a statement noted.
Economic Importance
Medicines are one of the the United Kingdom's biggest exports to the United States, which is clearly the primary market for major British pharmaceutical firms.
Export figures reveal that in the year leading up to last September, the UK exported drugs worth over eleven billion pounds to the US. This amount represented nearly one-fifth of total UK exports in that timeframe.
"This deal safeguards employment, stimulates investment and sets the stage for the UK to establish itself as a global hub for life sciences," the Business and Trade Secretary commented.
Specific British Pledges
The deal includes several key pledges from the UK:
- Revised Affordability Limit: The UK will increase the cost ceiling at which it deems new therapies to be too expensive by twenty-five percent.
- Higher Drug Budget: There is a goal to double total health service expenditure on treatments from 0.3% of Gross Domestic Product to 0.6 percent over the coming ten years.
- Payback Limit: The sum manufacturers must refund to the NHS to control costs will be capped at fifteen percent. Last year, refunds were more than twenty percent.
Industry Background
The pact follows a protracted tension between the drug companies and the UK government over drug pricing and approval rates.
These tensions were intensified by arguments that US customers were charged several times more for the same drugs than patients in the other developed nations.
Over the last 18 months, several major pharmaceutical investments in the UK have been delayed or scrapped, while substantial investments have been directed toward projects in the United States.
A senior figure stated that the NHS must spend more on medicines, noting that its spending on drugs had shrunk as a percentage of its overall budget over the previous ten-year period.
