The UK and US have announced a important bilateral deal that will ensure no tariffs on British pharmaceutical exports going into the US market.
The Terms of the Accord
Under the terms of the agreement, the UK has pledged to increase funding on medicines through the NHS. This commitment secures that tariffs on these crucial products will be held at zero for a period of the next three years.
This development follows previous threats to significantly raise tariffs on patented drug products, with increases discussed as high as 100%.
"This agreement with the Britain strengthens the global environment for innovative medicines and introduces long-overdue fairness to American-British medicine commerce," a release said.
Economic Significance
Pharmaceuticals represent one of the the United Kingdom's biggest export categories to the United States, which is clearly the primary destination for leading UK drugmakers.
Export figures indicate that in the year prior to last September, the UK sold drugs valued at £11.1bn to the US. This value represented 17.4% of total UK exports in that timeframe.
"This agreement safeguards jobs, increases investment and facilitates the UK to emerge as a international leader for biotech and pharma," the Business and Trade Secretary commented.
Detailed British Pledges
The agreement entails several notable pledges from the UK:
- Price Threshold Increase: The UK will lift the price threshold at which it considers new medicines to be unaffordable by 25%.
- Increased NHS Spending: There is a aim to raise overall health service expenditure on treatments from 0.3 percent of GDP to 0.6 percent over the following ten-year period.
- Refund Ceiling: The percentage drug companies must return to the NHS to prevent overspending will be restricted at fifteen percent. In the past, repayments topped twenty percent.
Industry Background
This agreement takes place against a ongoing tension between the pharmaceutical industry and the British authorities over spending levels and approval rates.
This friction were heightened by claims that American consumers were paying several times more for the equivalent treatments than consumers in the Britain and the EU.
In recent months, several significant drug company projects in the UK have been delayed or scrapped, while substantial funding commitments have been directed toward projects in the United States.
The Science Minister stated that the NHS needed to spend more on drugs, noting that its expenditure on drugs had declined as a share of its overall budget over the previous ten-year period.
