Britain and America have forged a significant trade agreement that will maintain zero tariffs on British pharmaceutical shipments going into the American market.
Agreement Details of the Deal
In exchange for the tariff guarantee, the UK has agreed to raise spending on drugs through the National Health Service (NHS). This move ensures that import taxes on these key products will be held at nothing for a period of three years.
This deal comes after earlier statements to dramatically increase duties on patented drug imports, with figures mentioned as high as one hundred percent.
"This deal with the Britain bolsters the worldwide climate for cutting-edge drugs and brings much-needed balance to U.S.–U.K. pharmaceutical trade," a statement noted.
Economic Importance
Pharmaceuticals are one of the UK's biggest exports to the US, which is easily the biggest market for leading UK drugmakers.
Export figures indicate that in the one-year period to the end of the third quarter, the UK shipped pharmaceutical products valued at billions to the US. This figure represented 17.4% of British export trade in that timeframe.
"This guarantee protects jobs, stimulates capital expenditure and sets the stage for the UK to become a worldwide center for medical research," a minister commented.
Specific UK Commitments
The agreement involves several key pledges from the United Kingdom:
- Revised Affordability Limit: The UK will raise the affordability limit at which it judges new treatments to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a target to raise overall NHS spending on medicines from 0.3% of GDP to 0.6 percent over the following ten-year period.
- Refund Ceiling: The percentage drug companies must refund to the NHS to stay within budget will be restricted at 15%. In the past, repayments topped 20%.
Industry Background
The pact takes place against a long-running tension between the drug companies and the ministers over spending levels and regulatory access.
These tensions were exacerbated by arguments that American patients were charged a premium for the equivalent treatments than patients in the UK and Europe.
Recently, several major drug company projects in the UK have been delayed or abandoned, while substantial expansions have been announced toward projects in the United States.
The Science Minister acknowledged that the NHS had to increase expenditure on medicines, noting that its expenditure on drugs had declined as a proportion of its resources over the past decade.
