The UK and US have signed a key trade agreement that will maintain zero import taxes on UK pharmaceutical shipments going into the American market.
The Terms of the Pact
Under the terms of the agreement, the UK has pledged to increase spending on medicines through the NHS. This pledge guarantees that tariffs on these vital exports will remain at zero for a duration of the next three years.
This development comes after previous threats to hike import taxes on patented drug imports, with potential rates mentioned reaching 100%.
"This arrangement between the Britain bolsters the global environment for innovative medicines and introduces long-overdue balance to American-British medicine commerce," a statement said.
Trade Impact
Medicines are one of the UK's largest export categories to the US, which is clearly the biggest buyer for large UK drugmakers.
Trade data reveal that in the year prior to the third quarter, the UK exported medicines worth billions to the US. This value accounted for 17.4% of all goods exports in that span.
"This deal secures work, stimulates funding and sets the stage for the UK to become a global hub for medical research," the Business and Trade Secretary stated.
Specific British Pledges
The pact includes several specific changes from the UK:
- Higher Cost Ceiling: The UK will lift the affordability limit at which it deems new medicines to be too expensive by a quarter.
- Higher Drug Budget: There is a goal to increase overall health service expenditure on drugs from 0.3 percent of GDP to 0.6% over the next decade.
- Payback Limit: The sum drug companies must refund to the NHS to stay within budget will be restricted at 15%. Last year, refunds exceeded 20%.
Broader Context
This agreement follows a ongoing row between the pharmaceutical industry and the UK government over spending levels and approval rates.
These tensions were intensified by assertions that American patients were charged several times more for the equivalent treatments than patients in the Britain and the EU.
Over the last 18 months, several major manufacturing plans in the UK have been halted or cancelled, while multi-billion-dollar funding commitments have been pledged toward projects in the United States.
A senior figure acknowledged that the NHS had to spend more on treatments, noting that its expenditure on drugs had decreased as a percentage of its overall budget over the previous ten-year period.