The UK and US have concluded a landmark trade agreement that will ensure zero import taxes on British pharmaceutical products going into the American market.
Key Provisions of the Accord
Under the terms of the agreement, the UK has agreed to boost spending on pharmaceuticals through the NHS. This commitment secures that import taxes on these vital products will be held at nothing for a duration of three years.
This deal follows previous threats to hike tariffs on patented pharmaceutical products, with increases mentioned reaching 100%.
"This deal between the Britain reinforces the international landscape for innovative medicines and brings much-needed balance to transatlantic drug exports," a statement noted.
Commercial Impact
Medicines constitute one of the UK's most significant goods shipped to the United States, which is easily the biggest destination for major UK drugmakers.
Trade data reveal that in the year leading up to last September, the UK sold medicines worth £11.1bn to the US. This value represented 17.4% of all goods exports in that period.
"This agreement safeguards employment, boosts capital expenditure and facilitates the UK to become a worldwide center for life sciences," the Business and Trade Secretary stated.
Detailed British Pledges
The deal entails several notable pledges from the UK:
- Higher Cost Ceiling: The UK will lift the price threshold at which it deems new medicines to be unaffordable by a quarter.
- Higher Drug Budget: There is a target to double overall public funding on drugs from 0.3% of the national economy to 0.6% over the next decade.
- Rebate Cap: The percentage manufacturers must return to the NHS to control costs will be limited at fifteen percent. Previously, refunds were more than twenty percent.
Recent Tensions
The deal comes amid a protracted row between the sector and the British authorities over spending levels and approval rates.
These tensions were heightened by arguments that US consumers were charged a premium for the same drugs than patients in the UK and Europe.
Recently, several large drug company projects in the UK have been delayed or cancelled, while multi-billion-dollar expansions have been announced toward US facilities.
One official publicly accepted that the NHS needed to invest a greater share on drugs, noting that its budget allocation on drugs had declined as a percentage of its resources over the past decade.
