The UK and US have hammered out a major trade agreement that will preserve no duties on British medicine exports entering the American market.
The Terms of the Deal
Under the terms of the agreement, the UK has agreed to increase funding on drugs through the NHS. This move secures that tariffs on these crucial goods will remain at zero for a timeframe of three years.
This deal follows earlier warnings to dramatically increase tariffs on branded drug imports, with figures discussed as high as double the cost.
"This agreement between the United Kingdom reinforces the international landscape for innovative medicines and establishes much-needed balance to U.S.–U.K. pharmaceutical trade," an announcement said.
Commercial Significance
Medicines represent one of the the United Kingdom's most significant exports to the United States, which is easily the largest buyer for major companies like GSK and AstraZeneca.
Statistics show that in the one-year period to the end of the third quarter, the UK shipped medicines worth billions to the US. This amount made up 17.4% of British export trade in that span.
"This guarantee protects jobs, boosts investment and paves the way for the UK to become a international leader for biotech and pharma," a government official commented.
Key NHS Changes
The pact involves several specific changes from the United Kingdom:
- Revised Affordability Limit: The UK will increase the affordability limit at which it deems new medicines to be too expensive by a quarter.
- Boosted Medicine Funding: There is a target to double total NHS spending on treatments from 0.3 percent of GDP to 0.6% over the following ten-year period.
- Refund Ceiling: The amount manufacturers must pay back to the NHS to stay within budget will be limited at fifteen percent. Last year, rebates exceeded twenty percent.
Industry Background
This agreement follows a long-running tension between the pharmaceutical industry and the ministers over medicine costs and approval rates.
This friction were intensified by arguments that US customers were charged significantly more for the equivalent treatments than people in the other developed nations.
In recent months, several large manufacturing plans in the UK have been halted or scrapped, while major investments have been directed toward projects in the United States.
The Science Minister publicly accepted that the NHS had to increase expenditure on treatments, noting that its spending on drugs had decreased as a share of its overall budget over the last ten years.
