The UK and US have signed a major commercial pact that will guarantee zero tariffs on British pharmaceutical exports entering the American market.
The Terms of the Deal
As part of the deal, the UK has committed to raise expenditure on pharmaceuticals through the National Health Service (NHS). This move ensures that import taxes on these key products will stay at nothing for a period of 36 months.
This development follows previous statements to hike import taxes on patented pharmaceutical imports, with increases floated up to one hundred percent.
"This arrangement with the Britain bolsters the worldwide climate for innovative medicines and establishes long-overdue balance to U.S.–U.K. drug exports," a statement noted.
Trade Importance
Drugs constitute one of the UK's largest goods shipped to the United States, which is by far the largest buyer for major companies like GSK and AstraZeneca.
Trade data indicate that in the one-year period to the end of September, the UK sold drugs worth over eleven billion pounds to the US. This amount represented nearly one-fifth of total UK exports in that span.
"This agreement safeguards jobs, stimulates capital expenditure and sets the stage for the UK to become a global hub for life sciences," the Business and Trade Secretary stated.
Key NHS Changes
The agreement entails several key commitments from the UK:
- Price Threshold Increase: The UK will raise the price threshold at which it considers new therapies to be unaffordable by a quarter.
- Higher Drug Budget: There is a target to double total health service expenditure on drugs from 0.3 percent of GDP to 0.6 percent over the next decade.
- Payback Limit: The sum drug companies must refund to the NHS to prevent overspending will be restricted at fifteen percent. Previously, rebates were more than twenty percent.
Broader Context
The pact takes place against a ongoing tension between the pharmaceutical industry and the ministers over drug pricing and NHS adoption.
These tensions were intensified by claims that US patients were charged several times more for the same drugs than people in the other developed nations.
Recently, several major drug company projects in the UK have been delayed or abandoned, while multi-billion-dollar funding commitments have been pledged toward projects in the United States.
One official stated that the NHS needed to invest a greater share on treatments, noting that its budget allocation on drugs had declined as a proportion of its resources over the previous ten-year period.
