The UK and US have concluded a landmark bilateral deal that will keep zero levies on UK medicine shipments being sold in the American market.
The Terms of the Pact
As part of the deal, the UK has agreed to increase funding on drugs through the National Health Service (NHS). This pledge guarantees that tariffs on these key products will remain at zero for a duration of the next three years.
This agreement comes after earlier warnings to hike duties on branded drug imports, with figures floated reaching 100%.
"This agreement between the United Kingdom bolsters the global environment for innovative medicines and brings much-needed equity to U.S.–U.K. medicine commerce," a statement noted.
Economic Impact
Medicines are one of the UK's most significant export categories to the America, which is clearly the primary destination for large companies like GSK and AstraZeneca.
Trade data show that in the 12 months prior to last September, the UK sold pharmaceutical products totaling £11.1bn to the US. This value made up a significant portion of all goods exports in that timeframe.
"This agreement protects jobs, boosts capital expenditure and paves the way for the UK to establish itself as a global hub for life sciences," the Business and Trade Secretary commented.
Specific UK Commitments
The agreement includes several key pledges from the British government:
- Higher Cost Ceiling: The UK will raise the price threshold at which it deems new medicines to be unaffordable by twenty-five percent.
- Increased NHS Spending: There is a goal to increase total health service expenditure on drugs from 0.3 percent of GDP to 0.6 percent over the coming ten years.
- Payback Limit: The percentage drug companies must return to the NHS to control costs will be capped at fifteen percent. Last year, rebates were more than 20%.
Industry Background
The deal follows a ongoing dispute between the sector and the British authorities over drug pricing and regulatory access.
The disagreement were intensified by arguments that US customers were charged significantly more for the identical medicines than people in the Britain and the EU.
In recent months, several large pharmaceutical investments in the UK have been delayed or abandoned, while major investments have been pledged toward US facilities.
The Science Minister acknowledged that the NHS needed to invest a greater share on treatments, noting that its budget allocation on drugs had decreased as a percentage of its overall budget over the past decade.
