The UK and US have reached a important trade agreement that will maintain zero tariffs on British drug exports going into the US market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has pledged to raise funding on drugs through the public health system. This commitment secures that import taxes on these vital goods will be held at nothing for a period of the next three years.
This agreement follows recent warnings to hike import taxes on branded pharmaceutical products, with potential rates mentioned as high as 100%.
"This deal between the Britain bolsters the worldwide climate for new treatments and brings much-needed balance to transatlantic pharmaceutical trade," a release noted.
Commercial Impact
Drugs are one of the the United Kingdom's largest export categories to the US, which is easily the largest market for large British pharmaceutical firms.
Trade data show that in the 12 months to the end of the third quarter, the UK sold pharmaceutical products valued at over eleven billion pounds to the US. This amount made up nearly one-fifth of British export trade in that timeframe.
"This guarantee safeguards work, increases funding and facilitates the UK to establish itself as a global hub for biotech and pharma," the Business and Trade Secretary remarked.
Key British Pledges
The agreement entails several notable commitments from the British government:
- Price Threshold Increase: The UK will raise the cost ceiling at which it considers new medicines to be prohibitively costly by a quarter.
- Higher Drug Budget: There is a aim to increase overall NHS spending on treatments from 0.3% of the national economy to 0.6% over the following ten-year period.
- Payback Limit: The sum pharmaceutical firms must return to the NHS to stay within budget will be restricted at fifteen percent. Last year, repayments exceeded 20%.
Industry Background
The pact follows a protracted row between the pharmaceutical industry and the British authorities over drug pricing and regulatory access.
These tensions were intensified by assertions that US customers were charged several times more for the equivalent treatments than consumers in the Britain and the EU.
Over the last 18 months, several significant manufacturing plans in the UK have been delayed or cancelled, while substantial expansions have been pledged toward projects in the United States.
The Science Minister publicly accepted that the NHS needed to invest a greater share on medicines, noting that its spending on drugs had shrunk as a proportion of its overall budget over the previous ten-year period.
