The UK and US have reached a key commercial pact that will maintain zero import taxes on British drug products entering the US market.
The Terms of the Accord
In exchange for the tariff guarantee, the UK has pledged to boost expenditure on medicines through the National Health Service (NHS). This commitment secures that import taxes on these key exports will stay at nothing for a period of the next three years.
This agreement follows previous threats to hike tariffs on branded pharmaceutical imports, with figures floated up to 100%.
"This agreement between the UK strengthens the global environment for new treatments and brings long-overdue fairness to American-British pharmaceutical trade," an announcement declared.
Commercial Importance
Pharmaceuticals are one of the UK's biggest exports to the US, which is easily the largest buyer for large UK drugmakers.
Export figures show that in the one-year period leading up to the third quarter, the UK sold drugs valued at billions to the US. This figure made up a significant portion of total UK exports in that period.
"This agreement secures jobs, stimulates capital expenditure and facilitates the UK to establish itself as a international leader for biotech and pharma," a government official commented.
Specific NHS Changes
The pact involves several notable changes from the British government:
- Price Threshold Increase: The UK will raise the affordability limit at which it considers new therapies to be prohibitively costly by a quarter.
- Higher Drug Budget: There is a target to double total health service expenditure on medicines from 0.3 percent of GDP to 0.6 percent over the following ten-year period.
- Payback Limit: The sum pharmaceutical firms must refund to the NHS to prevent overspending will be restricted at 15%. In the past, refunds topped 20%.
Industry Background
This agreement takes place against a long-running tension between the drug companies and the British authorities over medicine costs and approval rates.
This friction were intensified by assertions that US consumers were charged significantly more for the same drugs than consumers in the UK and Europe.
Over the last 18 months, several large pharmaceutical investments in the UK have been halted or cancelled, while substantial investments have been directed toward US facilities.
A senior figure acknowledged that the NHS had to increase expenditure on medicines, noting that its budget allocation on drugs had shrunk as a proportion of its overall budget over the last ten years.
