The UK and US have secured a major bilateral deal that will keep no levies on British medicine shipments entering the American market.
Agreement Details of the Accord
As part of the deal, the UK has committed to raise expenditure on medicines through the public health system. This commitment guarantees that duties on these key products will stay at nothing for a period of 36 months.
This agreement is in response to earlier threats to dramatically increase import taxes on branded pharmaceutical imports, with potential rates floated up to 100%.
"This arrangement with the United Kingdom reinforces the global environment for innovative medicines and establishes much-needed equity to U.S.–U.K. pharmaceutical trade," an announcement said.
Commercial Significance
Drugs are one of the UK's biggest export categories to the America, which is clearly the primary buyer for leading British pharmaceutical firms.
Trade data indicate that in the one-year period prior to September, the UK sold pharmaceutical products totaling £11.1bn to the US. This figure represented a significant portion of British export trade in that period.
"This deal secures work, stimulates funding and paves the way for the UK to emerge as a global hub for medical research," a government official stated.
Specific UK Commitments
The agreement includes several key commitments from the UK:
- Revised Affordability Limit: The UK will raise the cost ceiling at which it deems new medicines to be unaffordable by 25%.
- Higher Drug Budget: There is a aim to double overall health service expenditure on treatments from 0.3 percent of Gross Domestic Product to 0.6% over the following ten-year period.
- Refund Ceiling: The percentage drug companies must refund to the NHS to prevent overspending will be restricted at 15%. Previously, rebates were more than 20%.
Recent Tensions
The deal takes place against a ongoing row between the drug companies and the UK government over drug pricing and NHS adoption.
These tensions were intensified by arguments that US customers were charged several times more for the equivalent treatments than people in the other developed nations.
Over the last 18 months, several significant drug company projects in the UK have been delayed or abandoned, while multi-billion-dollar investments have been announced toward projects in the United States.
One official stated that the NHS needed to increase expenditure on drugs, noting that its spending on drugs had shrunk as a share of its resources over the last ten years.