The UK and US have signed a major bilateral deal that will keep zero duties on UK medicine shipments entering the American market.
Agreement Details of the Accord
In exchange for the tariff guarantee, the UK has pledged to raise funding on medicines through the public health system. This move ensures that tariffs on these crucial exports will stay at zero for a duration of three years.
This agreement is in response to recent warnings to dramatically increase duties on patented drug products, with increases discussed reaching double the cost.
"This agreement with the Britain strengthens the worldwide climate for cutting-edge drugs and establishes long-overdue balance to American-British medicine commerce," a statement noted.
Economic Importance
Medicines represent one of the UK's largest goods shipped to the America, which is clearly the primary buyer for major UK drugmakers.
Statistics show that in the year leading up to September, the UK sold medicines totaling £11.1bn to the US. This figure accounted for 17.4% of British export trade in that period.
"This deal safeguards employment, boosts investment and paves the way for the UK to establish itself as a global hub for biotech and pharma," the Business and Trade Secretary commented.
Key NHS Changes
The agreement entails several key changes from the British government:
- Higher Cost Ceiling: The UK will lift the cost ceiling at which it considers new treatments to be unaffordable by a quarter.
- Increased NHS Spending: There is a target to double overall public funding on drugs from 0.3% of the national economy to 0.6% over the coming ten years.
- Payback Limit: The amount drug companies must refund to the NHS to prevent overspending will be limited at 15%. Previously, rebates exceeded 20%.
Recent Tensions
The pact takes place against a long-running tension between the drug companies and the British authorities over medicine costs and NHS adoption.
These tensions were exacerbated by arguments that American consumers were paying a premium for the equivalent treatments than patients in the other developed nations.
Over the last 18 months, several large pharmaceutical investments in the UK have been paused or abandoned, while substantial expansions have been directed toward projects in the United States.
The Science Minister acknowledged that the NHS had to increase expenditure on treatments, noting that its expenditure on drugs had shrunk as a share of its overall budget over the past decade.
