Britain and America have hammered out a major commercial pact that will keep zero levies on UK pharmaceutical products entering the US market.
The Terms of the Deal
In exchange for the tariff guarantee, the UK has agreed to raise funding on drugs through the NHS. This pledge ensures that import taxes on these key products will be held at nothing for a period of three years.
This deal comes after recent warnings to dramatically increase tariffs on patented pharmaceutical products, with potential rates discussed up to 100%.
"This deal between the UK reinforces the global environment for new treatments and brings much-needed balance to U.S.–U.K. medicine commerce," a statement said.
Commercial Impact
Drugs are one of the the United Kingdom's biggest goods shipped to the US, which is by far the biggest market for major UK drugmakers.
Trade data show that in the 12 months leading up to September, the UK sold medicines worth over eleven billion pounds to the US. This value made up 17.4% of British export trade in that timeframe.
"This guarantee safeguards employment, stimulates funding and sets the stage for the UK to become a international leader for life sciences," the Business and Trade Secretary stated.
Specific NHS Changes
The agreement involves several specific changes from the United Kingdom:
- Price Threshold Increase: The UK will lift the cost ceiling at which it considers new therapies to be prohibitively costly by twenty-five percent.
- Increased NHS Spending: There is a goal to raise overall NHS spending on treatments from 0.3% of GDP to 0.6 percent over the following ten-year period.
- Rebate Cap: The amount drug companies must refund to the NHS to stay within budget will be restricted at 15%. In the past, repayments were more than twenty percent.
Industry Background
This agreement follows a long-running row between the drug companies and the ministers over drug pricing and NHS adoption.
These tensions were heightened by claims that American consumers were charged several times more for the same drugs than consumers in the UK and Europe.
Over the last 18 months, several significant manufacturing plans in the UK have been halted or scrapped, while multi-billion-dollar expansions have been directed toward American operations.
The Science Minister acknowledged that the NHS must spend more on medicines, noting that its spending on drugs had declined as a share of its resources over the last ten years.
