Britain and America have announced a key trade agreement that will guarantee zero duties on British drug shipments going into the US market.
The Terms of the Accord
Under the terms of the agreement, the UK has agreed to increase funding on drugs through the NHS. This commitment ensures that import taxes on these key goods will stay at nothing for a duration of three years.
This agreement comes after previous warnings to hike import taxes on patented pharmaceutical products, with potential rates discussed up to double the cost.
"This deal with the United Kingdom bolsters the worldwide climate for new treatments and brings much-needed equity to U.S.–U.K. pharmaceutical trade," a statement said.
Trade Impact
Pharmaceuticals are one of the the United Kingdom's most significant exports to the US, which is easily the largest buyer for major British pharmaceutical firms.
Statistics indicate that in the one-year period leading up to last September, the UK sold pharmaceutical products totaling over eleven billion pounds to the US. This value made up nearly one-fifth of British export trade in that period.
"This agreement safeguards employment, increases capital expenditure and facilitates the UK to establish itself as a international leader for biotech and pharma," the Business and Trade Secretary remarked.
Specific UK Commitments
The agreement involves several specific pledges from the UK:
- Price Threshold Increase: The UK will increase the cost ceiling at which it considers new therapies to be too expensive by a quarter.
- Increased NHS Spending: There is a aim to double total public funding on drugs from 0.3 percent of the national economy to 0.6% over the coming ten years.
- Rebate Cap: The sum pharmaceutical firms must return to the NHS to stay within budget will be limited at fifteen percent. In the past, repayments were more than 20%.
Broader Context
The pact comes amid a long-running row between the drug companies and the UK government over medicine costs and regulatory access.
These tensions were heightened by arguments that American consumers were charged significantly more for the equivalent treatments than patients in the other developed nations.
In recent months, several large drug company projects in the UK have been halted or scrapped, while multi-billion-dollar investments have been pledged toward projects in the United States.
The Science Minister acknowledged that the NHS needed to increase expenditure on drugs, noting that its spending on drugs had decreased as a percentage of its overall budget over the last ten years.
