Britain and America have reached a major bilateral deal that will maintain zero import taxes on British medicine products being sold in the US market.
The Terms of the Deal
In exchange for the tariff guarantee, the UK has agreed to raise spending on drugs through the National Health Service (NHS). This commitment secures that tariffs on these crucial goods will stay at zero for a duration of the next three years.
This agreement is in response to previous warnings to dramatically increase import taxes on branded drug products, with potential rates discussed reaching 100%.
"This arrangement between the United Kingdom reinforces the worldwide climate for new treatments and introduces much-needed balance to transatlantic medicine commerce," an announcement noted.
Trade Importance
Drugs constitute one of the Britain's biggest export categories to the US, which is by far the biggest buyer for leading British pharmaceutical firms.
Trade data reveal that in the year prior to September, the UK shipped pharmaceutical products valued at £11.1bn to the US. This amount made up nearly one-fifth of total UK exports in that timeframe.
"This deal protects work, stimulates funding and sets the stage for the UK to establish itself as a worldwide center for biotech and pharma," the Business and Trade Secretary commented.
Detailed UK Commitments
The deal includes several key commitments from the UK:
- Revised Affordability Limit: The UK will lift the price threshold at which it deems new therapies to be prohibitively costly by a quarter.
- Boosted Medicine Funding: There is a target to increase total public funding on drugs from 0.3% of GDP to 0.6% over the next decade.
- Refund Ceiling: The percentage manufacturers must return to the NHS to control costs will be limited at fifteen percent. Previously, repayments were more than 20%.
Recent Tensions
This agreement comes amid a ongoing tension between the drug companies and the UK government over drug pricing and NHS adoption.
The disagreement were heightened by arguments that US patients were paying a premium for the equivalent treatments than patients in the UK and Europe.
Over the last 18 months, several large manufacturing plans in the UK have been delayed or cancelled, while major funding commitments have been directed toward US facilities.
One official publicly accepted 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.
