The UK and US have announced a significant commercial pact that will keep no duties on UK medicine shipments being sold in the American market.
Key Provisions of the Pact
As part of the deal, the UK has agreed to increase funding on medicines through the NHS. This pledge secures that duties on these vital goods will stay at nothing for a period of the next three years.
This deal is in response to recent threats to significantly raise import taxes on branded drug imports, with increases discussed as high as 100%.
"This agreement between the Britain strengthens the global environment for innovative medicines and introduces much-needed balance to transatlantic drug exports," a statement noted.
Economic Significance
Medicines are one of the the United Kingdom's biggest goods shipped to the US, which is easily the largest market for major companies like GSK and AstraZeneca.
Statistics indicate that in the year leading up to last September, the UK exported drugs worth billions to the US. This figure accounted for 17.4% of all goods exports in that timeframe.
"This agreement secures work, increases investment and sets the stage for the UK to become a global hub for biotech and pharma," a government official stated.
Specific British Pledges
The agreement includes several notable commitments from the British government:
- Revised Affordability Limit: The UK will raise the affordability limit at which it judges new therapies to be unaffordable by twenty-five percent.
- Boosted Medicine Funding: There is a target to increase overall health service expenditure on medicines from 0.3% of GDP to 0.6% over the next decade.
- Rebate Cap: The percentage pharmaceutical firms must return to the NHS to control costs will be capped at 15%. In the past, refunds were more than 20%.
Industry Background
The deal comes amid a ongoing dispute between the drug companies and the ministers over drug pricing and NHS adoption.
The disagreement were heightened by arguments that US patients were paying significantly more for the equivalent treatments than patients in the other developed nations.
In recent months, several significant manufacturing plans in the UK have been delayed or cancelled, while multi-billion-dollar investments have been pledged toward American operations.
One official stated that the NHS had to invest a greater share on drugs, noting that its budget allocation on drugs had decreased as a percentage of its overall budget over the past decade.
