The UK and US have secured a landmark trade agreement that will ensure no tariffs on British drug exports being sold in the US market.
The Terms of the Pact
Under the terms of the agreement, the UK has pledged to boost spending on medicines through the National Health Service (NHS). This move secures that duties on these key exports will stay at nothing for a timeframe of 36 months.
This deal is in response to previous warnings to dramatically increase duties on patented drug products, with figures discussed up to one hundred percent.
"This deal between the United Kingdom bolsters the worldwide climate for innovative medicines and introduces long-overdue balance to transatlantic pharmaceutical trade," a statement noted.
Economic Significance
Pharmaceuticals represent one of the UK's biggest exports to the America, which is by far the biggest market for major companies like GSK and AstraZeneca.
Statistics reveal that in the 12 months prior to the third quarter, the UK sold medicines totaling £11.1bn to the US. This amount represented nearly one-fifth of British export trade in that timeframe.
"This agreement secures employment, boosts investment and sets the stage for the UK to emerge as a worldwide center for life sciences," the Business and Trade Secretary remarked.
Specific UK Commitments
The pact entails several specific pledges from the UK:
- Price Threshold Increase: The UK will increase the price threshold at which it considers new medicines to be unaffordable by twenty-five percent.
- Higher Drug Budget: There is a target to increase total health service expenditure on treatments from 0.3 percent of Gross Domestic Product to 0.6% over the following ten-year period.
- Rebate Cap: The percentage manufacturers must pay back to the NHS to stay within budget will be capped at 15%. Last year, rebates exceeded 20%.
Industry Background
The pact takes place against a protracted row between the drug companies and the British authorities over drug pricing and NHS adoption.
This friction were heightened by claims that US customers were charged several times more for the identical medicines than people in the other developed nations.
Recently, several large pharmaceutical investments in the UK have been halted or abandoned, while major funding commitments have been announced toward projects in the United States.
One official publicly accepted that the NHS had to increase expenditure on drugs, noting that its expenditure on drugs had shrunk as a share of its total funding over the previous ten-year period.
