The UK and US have hammered out a major trade agreement that will maintain zero import taxes on British medicine shipments being sold in the US market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has committed to boost funding on pharmaceuticals through the public health system. This pledge ensures that duties on these key goods will remain at nothing for a duration of the next three years.
This deal is in response to previous threats to dramatically increase import taxes on patented pharmaceutical products, with figures floated up to double the cost.
"This deal between the United Kingdom strengthens the worldwide climate for cutting-edge drugs and establishes long-overdue balance to American-British pharmaceutical trade," an announcement declared.
Economic Significance
Medicines are one of the Britain's biggest export categories to the US, which is clearly the largest market for major companies like GSK and AstraZeneca.
Trade data show that in the 12 months to the end of September, the UK sold pharmaceutical products totaling £11.1bn to the US. This figure represented a significant portion of total UK exports in that span.
"This agreement safeguards jobs, boosts investment and paves the way for the UK to establish itself as a global hub for medical research," the Business and Trade Secretary commented.
Detailed UK Commitments
The agreement entails several specific pledges from the United Kingdom:
- Revised Affordability Limit: The UK will increase the cost ceiling at which it judges new therapies to be too expensive by a quarter.
- Higher Drug Budget: There is a goal to increase total public funding on treatments from 0.3% of GDP to 0.6% over the next decade.
- Rebate Cap: The percentage drug companies must return to the NHS to prevent overspending will be limited at fifteen percent. Previously, rebates topped twenty percent.
Recent Tensions
The deal takes place against a long-running row between the drug companies and the UK government over medicine costs and NHS adoption.
These tensions were heightened by arguments that US customers were paying significantly more for the same drugs than consumers in the UK and Europe.
In recent months, several large manufacturing plans in the UK have been delayed or cancelled, while multi-billion-dollar investments have been pledged toward US facilities.
The Science Minister stated that the NHS must increase expenditure on drugs, noting that its budget allocation on drugs had decreased as a share of its overall budget over the past decade.
