The UK and US have signed a landmark trade agreement that will keep no tariffs on British drug shipments entering the American market.
The Terms of the Accord
As part of the deal, the UK has agreed to boost spending on pharmaceuticals through the National Health Service (NHS). This move guarantees that tariffs on these key exports will remain at zero for a timeframe of 36 months.
This deal follows previous threats to significantly raise import taxes on branded drug products, with potential rates mentioned as high as 100%.
"This agreement between the United Kingdom reinforces the global environment for new treatments and establishes long-overdue fairness to transatlantic drug exports," a statement said.
Economic Impact
Pharmaceuticals are one of the the United Kingdom's largest exports to the United States, which is clearly the biggest buyer for large UK drugmakers.
Statistics reveal that in the one-year period prior to September, the UK shipped pharmaceutical products valued at over eleven billion pounds to the US. This figure made up a significant portion of British export trade in that timeframe.
"This guarantee secures work, boosts investment and paves the way for the UK to emerge as a worldwide center for biotech and pharma," the Business and Trade Secretary remarked.
Detailed NHS Changes
The deal includes several notable changes from the British government:
- Higher Cost Ceiling: The UK will raise the affordability limit at which it deems new medicines to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a goal to raise total health service expenditure on drugs from 0.3% of the national economy to 0.6% over the following ten-year period.
- Rebate Cap: The amount drug companies must return to the NHS to prevent overspending will be restricted at fifteen percent. Previously, rebates were more than twenty percent.
Recent Tensions
The deal takes place against a protracted row between the drug companies and the ministers over spending levels and approval rates.
The disagreement were intensified by claims that American customers were charged several times more for the same drugs than patients in the UK and Europe.
Over the last 18 months, several large drug company projects in the UK have been halted or scrapped, while major funding commitments have been announced toward projects in the United States.
A senior figure stated that the NHS must increase expenditure on drugs, noting that its spending on drugs had decreased as a share of its resources over the last ten years.
