The United Kingdom and the United States have signed a important bilateral deal that will maintain no import taxes on British drug exports entering the US market.
The Terms of the Pact
As part of the deal, the UK has agreed to increase spending on pharmaceuticals through the public health system. This commitment secures that import taxes on these key products will remain at zero for a duration of the next three years.
This deal is in response to earlier warnings to dramatically increase import taxes on branded pharmaceutical imports, with figures mentioned up to one hundred percent.
"This agreement between the United Kingdom reinforces the worldwide climate for cutting-edge drugs and brings much-needed balance to American-British pharmaceutical trade," a statement noted.
Economic Impact
Drugs are one of the UK's most significant exports to the US, which is by far the primary destination for large UK drugmakers.
Export figures reveal that in the year to the end of the third quarter, the UK sold pharmaceutical products worth £11.1bn to the US. This figure represented nearly one-fifth of total UK exports in that timeframe.
"This agreement protects employment, stimulates investment and facilitates the UK to become a international leader for medical research," a government official commented.
Key UK Commitments
The agreement entails several specific commitments from the British government:
- Revised Affordability Limit: The UK will increase the price threshold at which it judges new medicines to be unaffordable by 25%.
- Increased NHS Spending: There is a goal to raise overall public funding on medicines from 0.3% of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Rebate Cap: The percentage drug companies must return to the NHS to control costs will be limited at fifteen percent. Previously, rebates topped 20%.
Recent Tensions
The deal follows a ongoing tension between the drug companies and the UK government over drug pricing and NHS adoption.
This friction were exacerbated by arguments that American customers were paying a premium for the equivalent treatments than patients in the other developed nations.
Recently, several significant drug company projects in the UK have been delayed or cancelled, while substantial expansions have been announced toward US facilities.
The Science Minister stated that the NHS had to invest a greater share on medicines, noting that its spending on drugs had shrunk as a proportion of its total funding over the last ten years.
