The UK and US have announced a landmark trade agreement that will preserve zero import taxes on British drug products being sold in the American market.
Key Provisions of the Deal
Under the terms of the agreement, the UK has pledged to increase funding on drugs through the National Health Service (NHS). This commitment guarantees that import taxes on these key products will be held at zero for a period of the next three years.
This agreement is in response to previous threats to dramatically increase tariffs on patented drug products, with figures floated up to 100%.
"This deal between the United Kingdom strengthens the international landscape for new treatments and brings long-overdue equity to transatlantic pharmaceutical trade," a release said.
Economic Significance
Pharmaceuticals represent one of the the United Kingdom's most significant goods shipped to the America, which is easily the largest buyer for major companies like GSK and AstraZeneca.
Trade data indicate that in the one-year period to the end of September, the UK exported medicines valued at £11.1bn to the US. This amount accounted for a significant portion of all goods exports in that span.
"This deal protects employment, increases investment and facilitates the UK to establish itself as a worldwide center for life sciences," a government official commented.
Key UK Commitments
The agreement entails several specific changes from the British government:
- Higher Cost Ceiling: The UK will increase the affordability limit at which it deems new therapies to be unaffordable by a quarter.
- Higher Drug Budget: There is a goal to double total public funding on drugs from 0.3 percent of GDP to 0.6% over the following ten-year period.
- Payback Limit: The percentage pharmaceutical firms must return to the NHS to prevent overspending will be restricted at 15%. In the past, refunds exceeded 20%.
Recent Tensions
This agreement takes place against a protracted tension between the sector and the UK government over medicine costs and regulatory access.
This friction were exacerbated by arguments that US consumers were charged several times more for the same drugs than people in the other developed nations.
Over the last 18 months, several large manufacturing plans in the UK have been halted or scrapped, while major investments have been announced toward projects in the United States.
One official publicly accepted that the NHS had to invest a greater share on drugs, noting that its budget allocation on drugs had shrunk as a proportion of its overall budget over the previous ten-year period.
