The UK and US have secured a landmark commercial pact that will guarantee zero import taxes on UK drug exports going into the American market.
Agreement Details of the Deal
Under the terms of the agreement, the UK has pledged to raise expenditure on drugs through the public health system. This pledge secures that tariffs on these crucial exports will be held at nothing for a period of 36 months.
This agreement comes after earlier warnings to significantly raise import taxes on patented pharmaceutical products, with increases floated up to 100%.
"This agreement between the United Kingdom reinforces the global environment for innovative medicines and establishes much-needed equity to U.S.–U.K. drug exports," a statement noted.
Economic Importance
Pharmaceuticals represent one of the Britain's biggest goods shipped to the US, which is by far the largest buyer for major companies like GSK and AstraZeneca.
Trade data reveal that in the 12 months prior to the third quarter, the UK exported medicines worth billions to the US. This value accounted for 17.4% of all goods exports in that period.
"This deal protects jobs, boosts capital expenditure and paves the way for the UK to establish itself as a international leader for biotech and pharma," a minister commented.
Detailed UK Commitments
The deal includes several key commitments from the British government:
- Revised Affordability Limit: The UK will increase the affordability limit at which it deems new therapies to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a target to raise total public funding on medicines from 0.3% of GDP to 0.6 percent over the coming ten years.
- Payback Limit: The sum manufacturers must refund to the NHS to prevent overspending will be limited at fifteen percent. Previously, rebates were more than twenty percent.
Industry Background
This agreement follows a ongoing row between the sector and the UK government over spending levels and approval rates.
These tensions were exacerbated by claims that American patients were paying a premium for the equivalent treatments than patients in the Britain and the EU.
Recently, several significant pharmaceutical investments in the UK have been paused or scrapped, while major investments have been announced toward projects in the United States.
The Science Minister publicly accepted that the NHS needed to spend more on drugs, noting that its expenditure on drugs had decreased as a percentage of its resources over the past decade.
