The UK and US have finalized a significant trade agreement that will preserve zero import taxes on UK pharmaceutical products entering the US market.
The Terms of the Deal
Under the terms of the agreement, the UK has agreed to raise expenditure on pharmaceuticals through the National Health Service (NHS). This commitment ensures that import taxes on these key products will be held at zero for a period of the next three years.
This deal follows earlier threats to hike tariffs on branded drug imports, with figures discussed reaching double the cost.
"This agreement between the United Kingdom bolsters the global environment for cutting-edge drugs and brings much-needed balance to U.S.–U.K. drug exports," an announcement noted.
Trade Importance
Drugs represent one of the Britain's most significant export categories to the America, which is easily the largest market for leading companies like GSK and AstraZeneca.
Export figures show that in the 12 months prior to last September, the UK exported pharmaceutical products worth £11.1bn to the US. This amount represented nearly one-fifth of total UK exports in that period.
"This guarantee secures employment, stimulates investment and facilitates the UK to emerge as a worldwide center for biotech and pharma," the Business and Trade Secretary commented.
Key NHS Changes
The pact includes several specific changes from the UK:
- Higher Cost Ceiling: The UK will increase the price threshold at which it deems new medicines to be prohibitively costly by 25%.
- Higher Drug Budget: There is a target to increase total health service expenditure on medicines from 0.3 percent of GDP to 0.6 percent over the following ten-year period.
- Refund Ceiling: The sum manufacturers must return to the NHS to control costs will be restricted at fifteen percent. Previously, repayments exceeded 20%.
Industry Background
The pact follows a long-running row between the pharmaceutical industry and the UK government over medicine costs and NHS adoption.
The disagreement were exacerbated by assertions that US customers were charged a premium for the equivalent treatments than patients in the UK and Europe.
Recently, several major drug company projects in the UK have been paused or cancelled, while major funding commitments have been announced toward US facilities.
The Science Minister publicly accepted that the NHS had to spend more on treatments, noting that its spending on drugs had declined as a share of its overall budget over the past decade.
