The UK and US have established a landmark trade agreement that will keep no duties on British medicine exports being sold in the US market.
The Terms of the Deal
As part of the deal, the UK has committed to boost funding on pharmaceuticals through the NHS. This pledge ensures that duties on these vital goods will remain at nothing for a duration of the next three years.
This agreement is in response to earlier warnings to hike duties on branded drug products, with increases floated as high as 100%.
"This deal with the UK bolsters the global environment for cutting-edge drugs and introduces much-needed equity to U.S.–U.K. drug exports," a statement noted.
Trade Significance
Medicines are one of the the United Kingdom's most significant exports to the United States, which is clearly the largest market for large UK drugmakers.
Trade data indicate that in the one-year period prior to last September, the UK exported pharmaceutical products totaling £11.1bn to the US. This value made up a significant portion of total UK exports in that timeframe.
"This guarantee safeguards jobs, increases capital expenditure and sets the stage for the UK to emerge as a international leader for biotech and pharma," a minister stated.
Detailed British Pledges
The deal entails several key changes from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the cost ceiling at which it judges new treatments to be prohibitively costly by a quarter.
- Boosted Medicine Funding: There is a target to raise overall health service expenditure on drugs from 0.3% of the national economy to 0.6% over the next decade.
- Refund Ceiling: The sum drug companies must refund to the NHS to control costs will be capped at 15%. Previously, rebates were more than 20%.
Industry Background
The pact follows a ongoing tension between the pharmaceutical industry and the British authorities over medicine costs and approval rates.
The disagreement were heightened by assertions that US customers were paying a premium for the identical medicines than patients in the UK and Europe.
Recently, several significant drug company projects in the UK have been halted or scrapped, while major expansions have been pledged toward projects in the United States.
One official publicly accepted that the NHS had to spend more on drugs, noting that its budget allocation on drugs had decreased as a share of its overall budget over the past decade.
