The United Kingdom and the United States have concluded a major commercial pact that will keep zero levies on UK drug exports going into the US market.
Key Provisions of the Deal
Under the terms of the agreement, the UK has pledged to raise spending on medicines through the National Health Service (NHS). This move secures that import taxes on these key goods will stay at zero for a duration of the next three years.
This deal follows previous threats to significantly raise import taxes on branded pharmaceutical products, with increases floated as high as 100%.
"This deal between the United Kingdom bolsters the worldwide climate for cutting-edge drugs and brings much-needed balance to transatlantic pharmaceutical trade," a statement noted.
Trade Impact
Drugs are one of the the United Kingdom's most significant exports to the US, which is by far the biggest market for large companies like GSK and AstraZeneca.
Trade data show that in the year leading up to September, the UK shipped drugs worth £11.1bn to the US. This figure made up nearly one-fifth of total UK exports in that span.
"This guarantee safeguards jobs, boosts capital expenditure and facilitates the UK to emerge as a worldwide center for medical research," the Business and Trade Secretary commented.
Key UK Commitments
The agreement includes several specific commitments from the United Kingdom:
- Price Threshold Increase: The UK will lift the affordability limit at which it considers new treatments to be too expensive by a quarter.
- Higher Drug Budget: There is a aim to raise total public funding on medicines from 0.3% of Gross Domestic Product to 0.6% over the following ten-year period.
- Rebate Cap: The sum manufacturers must return to the NHS to stay within budget will be restricted at 15%. Previously, refunds exceeded 20%.
Recent Tensions
The deal comes amid a ongoing row between the pharmaceutical industry and the British authorities over drug pricing and NHS adoption.
This friction were exacerbated by arguments that US patients were paying a premium for the same drugs than consumers in the other developed nations.
Recently, several significant drug company projects in the UK have been halted or abandoned, while multi-billion-dollar expansions have been announced toward projects in the United States.
One official publicly accepted that the NHS needed to spend more on treatments, noting that its spending on drugs had decreased as a percentage of its resources over the past decade.
