The UK and US have established a important commercial pact that will guarantee zero tariffs on British medicine exports entering the US market.
Agreement Details of the Accord
Under the terms of the agreement, the UK has committed to raise spending on drugs through the public health system. This move ensures that duties on these crucial products will remain at zero for a timeframe of three years.
This agreement comes after earlier statements to hike duties on branded drug imports, with potential rates floated up to double the cost.
"This agreement with the United Kingdom strengthens the worldwide climate for cutting-edge drugs and establishes much-needed equity to transatlantic medicine commerce," a statement said.
Trade Significance
Pharmaceuticals constitute one of the UK's largest exports to the US, which is easily the biggest market for major companies like GSK and AstraZeneca.
Export figures show that in the year leading up to last September, the UK sold pharmaceutical products worth billions to the US. This value represented a significant portion of British export trade in that period.
"This deal secures employment, increases capital expenditure and facilitates the UK to emerge as a global hub for biotech and pharma," the Business and Trade Secretary stated.
Specific NHS Changes
The deal includes several notable changes from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the affordability limit at which it considers new medicines to be prohibitively costly by a quarter.
- Higher Drug Budget: There is a goal to raise total NHS spending on medicines from 0.3% of the national economy to 0.6% over the next decade.
- Refund Ceiling: The percentage manufacturers must refund to the NHS to stay within budget will be restricted at 15%. Previously, repayments were more than 20%.
Broader Context
This agreement takes place against a ongoing row between the drug companies and the UK government over drug pricing and regulatory access.
These tensions were intensified by assertions that American patients were paying a premium for the same drugs than consumers in the other developed nations.
Over the last 18 months, several major drug company projects in the UK have been delayed or cancelled, while substantial funding commitments have been pledged toward US facilities.
The Science Minister acknowledged that the NHS must spend more on treatments, noting that its budget allocation on drugs had decreased as a share of its overall budget over the past decade.
