The UK and US have announced a major trade agreement that will preserve zero levies on British medicine exports being sold in the US market.
Key Provisions of the Accord
In exchange for the tariff guarantee, the UK has committed to raise spending on pharmaceuticals through the National Health Service (NHS). This move guarantees that import taxes on these key exports will stay at zero for a timeframe of three years.
This agreement follows recent threats to hike import taxes on patented drug products, with increases discussed up to 100%.
"This agreement with the Britain strengthens the worldwide climate for innovative medicines and brings much-needed fairness to transatlantic medicine commerce," a release said.
Trade Impact
Pharmaceuticals represent one of the UK's largest exports to the United States, which is clearly the largest market for large companies like GSK and AstraZeneca.
Statistics show that in the year prior to September, the UK exported pharmaceutical products valued at billions to the US. This amount accounted for a significant portion of all goods exports in that timeframe.
"This agreement protects work, stimulates investment and paves the way for the UK to become a worldwide center for biotech and pharma," a government official commented.
Detailed British Pledges
The deal includes several notable commitments from the UK:
- Price Threshold Increase: The UK will raise the price threshold at which it deems new treatments to be prohibitively costly by a quarter.
- Boosted Medicine Funding: There is a aim to double total public funding on drugs from 0.3 percent of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Rebate Cap: The percentage manufacturers must refund to the NHS to prevent overspending will be limited at fifteen percent. Last year, refunds were more than 20%.
Industry Background
The pact takes place against a long-running dispute between the drug companies and the ministers over drug pricing and NHS adoption.
This friction were heightened by arguments that US customers were paying a premium for the equivalent treatments than consumers in the Britain and the EU.
Recently, several major pharmaceutical investments in the UK have been delayed or scrapped, while substantial funding commitments have been pledged toward projects in the United States.
One official acknowledged that the NHS must spend more on drugs, noting that its budget allocation on drugs had declined as a proportion of its overall budget over the past decade.
