The United Kingdom and the United States have announced a significant trade agreement that will preserve no levies on British pharmaceutical exports entering the American market.
The Terms of the Deal
As part of the deal, the UK has pledged to boost spending on medicines through the public health system. This pledge secures that import taxes on these key goods will stay at zero for a period of 36 months.
This agreement is in response to previous threats to dramatically increase duties on branded drug imports, with increases floated up to double the cost.
"This deal between the Britain reinforces the worldwide climate for innovative medicines and introduces much-needed equity to transatlantic medicine commerce," a statement said.
Commercial Importance
Drugs constitute one of the Britain's largest exports to the United States, which is clearly the primary market for large British pharmaceutical firms.
Statistics show that in the one-year period prior to September, the UK sold pharmaceutical products totaling billions to the US. This value accounted for nearly one-fifth of British export trade in that period.
"This agreement safeguards employment, increases funding and sets the stage for the UK to emerge as a global hub for medical research," the Business and Trade Secretary remarked.
Specific UK Commitments
The agreement includes several specific changes from the United Kingdom:
- Higher Cost Ceiling: The UK will raise the affordability limit at which it deems new medicines to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a target to double overall public funding on drugs from 0.3% of GDP to 0.6 percent over the next decade.
- Payback Limit: The amount pharmaceutical firms must return to the NHS to stay within budget will be limited at 15%. Previously, repayments were more than 20%.
Industry Background
This agreement comes amid a ongoing tension between the drug companies and the ministers over spending levels and approval rates.
These tensions were heightened by assertions that US patients were charged a premium for the same drugs than people in the other developed nations.
In recent months, several major pharmaceutical investments in the UK have been delayed or abandoned, while major investments have been directed toward US facilities.
The Science Minister acknowledged that the NHS must spend more on medicines, noting that its spending on drugs had declined as a share of its overall budget over the previous ten-year period.
