The United Kingdom and the United States have established a landmark bilateral deal that will keep zero tariffs on British medicine shipments entering the US market.
Agreement Details of the Deal
Under the terms of the agreement, the UK has pledged to raise funding on medicines through the National Health Service (NHS). This commitment secures that tariffs on these vital products will be held at zero for a period of three years.
This deal is in response to previous statements to dramatically increase import taxes on branded drug imports, with increases floated up to 100%.
"This arrangement with the United Kingdom reinforces the worldwide climate for cutting-edge drugs and introduces long-overdue fairness to U.S.–U.K. pharmaceutical trade," an announcement said.
Commercial Importance
Pharmaceuticals represent one of the UK's biggest exports to the US, which is clearly the largest buyer for major companies like GSK and AstraZeneca.
Statistics show that in the 12 months to the end of the third quarter, the UK exported pharmaceutical products worth £11.1bn to the US. This value represented 17.4% of British export trade in that period.
"This deal safeguards employment, stimulates capital expenditure and sets the stage for the UK to become a international leader for medical research," a government official remarked.
Detailed UK Commitments
The pact entails several key commitments from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the cost ceiling at which it judges new treatments to be prohibitively costly by 25%.
- Higher Drug Budget: There is a target to raise overall health service expenditure on treatments from 0.3 percent of the national economy to 0.6 percent over the next decade.
- Rebate Cap: The percentage drug companies must pay back to the NHS to stay within budget will be limited at 15%. Last year, rebates topped twenty percent.
Recent Tensions
This agreement follows a long-running tension between the drug companies and the British authorities over medicine costs and NHS adoption.
This friction were exacerbated by assertions that American customers were paying several times more for the equivalent treatments than consumers in the UK and Europe.
In recent months, several significant pharmaceutical investments in the UK have been paused or scrapped, while major funding commitments have been pledged toward projects in the United States.
The Science Minister acknowledged that the NHS must increase expenditure on medicines, noting that its expenditure on drugs had decreased as a proportion of its resources over the last ten years.
