The UK and US have secured a major trade agreement that will maintain no duties on UK pharmaceutical products entering the American market.
Key Provisions of the Deal
As part of the deal, the UK has pledged to raise spending on pharmaceuticals through the National Health Service (NHS). This move secures that import taxes on these vital exports will remain at zero for a period of three years.
This deal comes after recent statements to significantly raise duties on branded drug imports, with figures floated reaching 100%.
"This agreement between the Britain reinforces the global environment for new treatments and introduces long-overdue balance to American-British pharmaceutical trade," a statement noted.
Trade Impact
Drugs are one of the Britain's most significant export categories to the America, which is by far the largest buyer for major UK drugmakers.
Trade data reveal that in the 12 months to the end of last September, the UK exported drugs totaling billions to the US. This amount accounted for nearly one-fifth of total UK exports in that timeframe.
"This deal safeguards employment, stimulates funding and sets the stage for the UK to become a worldwide center for medical research," the Business and Trade Secretary stated.
Detailed British Pledges
The agreement includes several notable changes from the United Kingdom:
- Price Threshold Increase: The UK will raise the price threshold at which it considers new treatments to be prohibitively costly by 25%.
- Higher Drug Budget: There is a aim to double total public funding on drugs from 0.3 percent of the national economy to 0.6 percent over the coming ten years.
- Payback Limit: The amount manufacturers must return to the NHS to stay within budget will be capped at fifteen percent. In the past, rebates topped 20%.
Broader Context
This agreement comes amid a protracted row between the drug companies and the British authorities over drug pricing and regulatory access.
This friction were exacerbated by assertions that US customers were paying significantly more for the equivalent treatments than patients in the other developed nations.
Recently, several significant manufacturing plans in the UK have been paused or cancelled, while multi-billion-dollar expansions have been announced toward US facilities.
The Science Minister stated that the NHS needed to increase expenditure on medicines, noting that its expenditure on drugs had shrunk as a percentage of its resources over the last ten years.
