The UK and US have concluded a key bilateral deal that will ensure zero import taxes on British medicine products entering the US market.
The Terms of the Pact
As part of the deal, the UK has agreed to raise funding on pharmaceuticals through the public health system. This move guarantees that tariffs on these key products will stay at nothing for a timeframe of three years.
This deal is in response to earlier threats to hike import taxes on patented drug imports, with figures floated as high as 100%.
"This agreement with the United Kingdom bolsters the international landscape for innovative medicines and brings long-overdue balance to U.S.–U.K. pharmaceutical trade," a release noted.
Commercial Impact
Pharmaceuticals represent one of the the United Kingdom's biggest export categories to the America, which is easily the largest market for leading companies like GSK and AstraZeneca.
Trade data show that in the one-year period to the end of last September, the UK sold drugs totaling over eleven billion pounds to the US. This figure made up nearly one-fifth of all goods exports in that span.
"This guarantee secures work, boosts investment and paves the way for the UK to emerge as a global hub for life sciences," a government official stated.
Key British Pledges
The agreement entails several specific pledges from the British government:
- Price Threshold Increase: The UK will increase the affordability limit at which it deems new treatments to be too expensive by twenty-five percent.
- Boosted Medicine Funding: There is a goal to double total NHS spending on drugs from 0.3% of the national economy to 0.6 percent over the coming ten years.
- Refund Ceiling: The percentage drug companies must refund to the NHS to prevent overspending will be limited at fifteen percent. In the past, rebates exceeded twenty percent.
Industry Background
The deal follows a ongoing tension between the drug companies and the British authorities over drug pricing and regulatory access.
The disagreement were exacerbated by claims that American consumers were charged a premium for the equivalent treatments than patients in the Britain and the EU.
Over the last 18 months, several significant pharmaceutical investments in the UK have been delayed or cancelled, while major investments have been pledged toward US facilities.
One official acknowledged that the NHS had to increase expenditure on treatments, noting that its expenditure on drugs had declined as a share of its total funding over the past decade.
