The UK and US have signed a landmark commercial pact that will guarantee no import taxes on UK medicine shipments entering the American market.
The Terms of the Accord
In exchange for the tariff guarantee, the UK has committed to increase expenditure on medicines through the NHS. This pledge secures that import taxes on these crucial exports will stay at zero for a period of the next three years.
This agreement is in response to earlier threats to dramatically increase import taxes on branded pharmaceutical products, with potential rates discussed as high as 100%.
"This arrangement between the UK reinforces the international landscape for innovative medicines and introduces long-overdue fairness to U.S.–U.K. pharmaceutical trade," a release said.
Economic Significance
Drugs constitute one of the Britain's largest goods shipped to the America, which is by far the biggest market for large British pharmaceutical firms.
Statistics show that in the one-year period to the end of last September, the UK sold drugs valued at billions to the US. This amount made up a significant portion of British export trade in that period.
"This deal secures employment, stimulates funding and sets the stage for the UK to emerge as a worldwide center for medical research," the Business and Trade Secretary commented.
Specific NHS Changes
The deal includes several specific pledges from the United Kingdom:
- Revised Affordability Limit: The UK will raise the affordability limit at which it judges new treatments to be prohibitively costly by a quarter.
- Higher Drug Budget: There is a aim to double total NHS spending on medicines from 0.3% of GDP to 0.6 percent over the coming ten years.
- Refund Ceiling: The percentage drug companies must return to the NHS to stay within budget will be capped at 15%. Last year, rebates exceeded 20%.
Industry Background
This agreement comes amid a protracted row between the pharmaceutical industry and the UK government over spending levels and NHS adoption.
This friction were intensified by claims that American customers were charged a premium for the identical medicines than consumers in the UK and Europe.
In recent months, several large drug company projects in the UK have been halted or cancelled, while substantial funding commitments have been announced toward projects in the United States.
The Science Minister acknowledged that the NHS needed to invest a greater share on treatments, noting that its expenditure on drugs had declined as a share of its overall budget over the previous ten-year period.
