Britain and America have agreed to a important trade agreement that will keep no import taxes on UK drug shipments being sold in the American market.
Agreement Details of the Deal
As part of the deal, the UK has pledged to boost funding on drugs through the NHS. This pledge secures that duties on these key products will remain at zero for a duration of 36 months.
This development is in response to previous statements to dramatically increase duties on patented drug products, with figures floated up to one hundred percent.
"This deal with the United Kingdom bolsters the global environment for cutting-edge drugs and introduces long-overdue equity to U.S.–U.K. drug exports," an announcement noted.
Economic Significance
Pharmaceuticals are one of the the United Kingdom's most significant goods shipped to the America, which is by far the primary market for major companies like GSK and AstraZeneca.
Export figures reveal that in the one-year period leading up to September, the UK shipped pharmaceutical products worth billions to the US. This value represented 17.4% of total UK exports in that timeframe.
"This deal secures employment, increases investment and facilitates the UK to establish itself as a worldwide center for life sciences," the Business and Trade Secretary stated.
Specific NHS Changes
The agreement involves several specific changes from the British government:
- Revised Affordability Limit: The UK will increase the cost ceiling at which it considers new treatments to be too expensive by twenty-five percent.
- Higher Drug Budget: There is a target to double overall NHS spending on drugs from 0.3% of GDP to 0.6% over the following ten-year period.
- Rebate Cap: The sum manufacturers must pay back to the NHS to prevent overspending will be capped at fifteen percent. Previously, refunds were more than 20%.
Industry Background
The deal comes amid a protracted dispute between the drug companies and the ministers over drug pricing and approval rates.
These tensions were intensified by arguments that US consumers were charged several times more for the equivalent treatments than people in the UK and Europe.
In recent months, several major manufacturing plans in the UK have been halted or cancelled, while multi-billion-dollar expansions have been pledged toward projects in the United States.
One official acknowledged that the NHS needed to spend more on medicines, noting that its spending on drugs had decreased as a percentage of its resources over the last ten years.
