The UK and US have signed a major commercial pact that will ensure zero import taxes on UK pharmaceutical products entering the American market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has pledged to increase expenditure on medicines through the National Health Service (NHS). This pledge ensures that import taxes on these crucial goods will be held at nothing for a duration of the next three years.
This deal comes after previous statements to dramatically increase tariffs on branded pharmaceutical products, with figures mentioned reaching one hundred percent.
"This arrangement between the Britain bolsters the international landscape for innovative medicines and brings long-overdue balance to American-British pharmaceutical trade," a statement said.
Economic Impact
Medicines are one of the Britain's most significant goods shipped to the US, which is easily the biggest market for large companies like GSK and AstraZeneca.
Statistics show that in the 12 months leading up to September, the UK exported medicines totaling over eleven billion pounds to the US. This value represented 17.4% of all goods exports in that period.
"This guarantee protects work, stimulates funding and paves the way for the UK to become a global hub for biotech and pharma," the Business and Trade Secretary commented.
Key British Pledges
The agreement includes several specific changes from the United Kingdom:
- Price Threshold Increase: The UK will raise the affordability limit at which it judges new medicines to be prohibitively costly by 25%.
- Increased NHS Spending: There is a target to double total NHS spending on treatments from 0.3 percent of Gross Domestic Product to 0.6% over the coming ten years.
- Payback Limit: The percentage manufacturers must return to the NHS to control costs will be limited at 15%. Last year, refunds were more than 20%.
Recent Tensions
This agreement comes amid a protracted dispute between the drug companies and the UK government over drug pricing and regulatory access.
The disagreement were intensified by arguments that American patients were paying a premium for the same drugs than people in the Britain and the EU.
Recently, several major manufacturing plans in the UK have been paused or cancelled, while multi-billion-dollar investments have been pledged toward US facilities.
One official publicly accepted that the NHS needed to invest a greater share on drugs, noting that its expenditure on drugs had declined as a share of its overall budget over the last ten years.
