The UK and US have agreed to a major commercial pact that will ensure zero duties on British medicine products being sold in the US market.
Agreement Details of the Deal
As part of the deal, the UK has committed to increase funding on drugs through the National Health Service (NHS). This move secures that import taxes on these crucial goods will be held at zero for a duration of three years.
This deal follows earlier threats to dramatically increase duties on patented drug imports, with potential rates mentioned reaching 100%.
"This arrangement with the United Kingdom strengthens the international landscape for cutting-edge drugs and establishes long-overdue equity to U.S.–U.K. medicine commerce," an announcement said.
Commercial Significance
Medicines constitute one of the the United Kingdom's most significant export categories to the America, which is by far the largest market for large UK drugmakers.
Statistics reveal that in the one-year period leading up to September, the UK sold drugs valued at over eleven billion pounds to the US. This value accounted for nearly one-fifth of British export trade in that span.
"This guarantee safeguards work, boosts capital expenditure and paves the way for the UK to establish itself as a international leader for biotech and pharma," a government official commented.
Key UK Commitments
The agreement includes several notable changes from the UK:
- Price Threshold Increase: The UK will raise the affordability limit at which it judges new medicines to be too expensive by 25%.
- Increased NHS Spending: There is a target to double total public funding on medicines from 0.3% of GDP to 0.6 percent over the next decade.
- Rebate Cap: The amount drug companies must refund to the NHS to stay within budget will be limited at 15%. Last year, refunds topped 20%.
Recent Tensions
The deal takes place against a protracted tension between the pharmaceutical industry and the British authorities over spending levels and approval rates.
The disagreement were intensified by arguments that US customers were paying significantly more for the same drugs than patients in the UK and Europe.
Recently, several large drug company projects in the UK have been halted or cancelled, while major expansions have been directed toward projects in the United States.
The Science Minister publicly accepted that the NHS must spend more on treatments, noting that its budget allocation on drugs had decreased as a percentage of its overall budget over the past decade.
