The United Kingdom and the United States have reached a major trade agreement that will guarantee zero import taxes on British drug products being sold in the American market.
The Terms of the Pact
Under the terms of the agreement, the UK has pledged to increase funding on drugs through the NHS. This move guarantees that tariffs on these crucial exports will stay at zero for a duration of three years.
This development is in response to previous warnings to significantly raise import taxes on patented pharmaceutical products, with figures mentioned up to 100%.
"This agreement between the United Kingdom strengthens the international landscape for new treatments and introduces long-overdue balance to American-British pharmaceutical trade," a release said.
Commercial Significance
Pharmaceuticals constitute one of the Britain's largest export categories to the United States, which is clearly the primary buyer for large UK drugmakers.
Statistics indicate that in the one-year period prior to September, the UK sold pharmaceutical products totaling £11.1bn to the US. This amount represented nearly one-fifth of all goods exports in that timeframe.
"This deal protects work, boosts capital expenditure and paves the way for the UK to become a worldwide center for life sciences," a government official remarked.
Specific UK Commitments
The deal includes several notable changes from the British government:
- Price Threshold Increase: The UK will increase the price threshold at which it deems new medicines to be unaffordable by 25%.
- Boosted Medicine Funding: There is a target to increase total public funding on treatments from 0.3 percent of GDP to 0.6% over the coming ten years.
- Rebate Cap: The amount manufacturers must pay back to the NHS to control costs will be limited at 15%. Previously, refunds were more than 20%.
Broader Context
This agreement follows a long-running row between the pharmaceutical industry and the British authorities over drug pricing and approval rates.
This friction were intensified by claims that American consumers were paying a premium for the equivalent treatments than people in the other developed nations.
Over the last 18 months, several major drug company projects in the UK have been halted or scrapped, while multi-billion-dollar funding commitments have been announced toward projects in the United States.
The Science Minister acknowledged that the NHS had to invest a greater share on medicines, noting that its budget allocation on drugs had decreased as a share of its total funding over the last ten years.
