The United Kingdom and the United States have announced a major bilateral deal that will preserve no import taxes on UK medicine shipments being sold in the US market.
The Terms of the Pact
As part of the deal, the UK has committed to increase expenditure on drugs through the National Health Service (NHS). This pledge ensures that tariffs on these crucial goods will remain at zero for a timeframe of 36 months.
This deal is in response to previous warnings to hike import taxes on patented drug products, with potential rates floated as high as double the cost.
"This agreement with the Britain reinforces the global environment for new treatments and establishes long-overdue fairness to U.S.–U.K. medicine commerce," an announcement noted.
Commercial Impact
Medicines are one of the UK's most significant exports to the US, which is easily the biggest market for large British pharmaceutical firms.
Export figures show that in the one-year period leading up to last September, the UK sold drugs worth over eleven billion pounds to the US. This figure represented nearly one-fifth of all goods exports in that timeframe.
"This deal secures jobs, boosts investment and facilitates the UK to become a international leader for life sciences," the Business and Trade Secretary stated.
Specific NHS Changes
The pact involves several key commitments from the UK:
- Higher Cost Ceiling: The UK will lift the price threshold at which it considers new medicines to be too expensive by a quarter.
- Increased NHS Spending: There is a target to double overall public funding on medicines from 0.3% of GDP to 0.6% over the following ten-year period.
- Rebate Cap: The amount drug companies must pay back to the NHS to control costs will be limited at 15%. In the past, refunds topped twenty percent.
Industry Background
This agreement follows a ongoing dispute between the drug companies and the ministers over spending levels and approval rates.
These tensions were intensified by arguments that American patients were paying significantly more for the identical medicines than patients in the Britain and the EU.
Over the last 18 months, several large manufacturing plans in the UK have been halted or cancelled, while major funding commitments have been announced toward US facilities.
A senior figure acknowledged that the NHS had to increase expenditure on drugs, noting that its spending on drugs had decreased as a proportion of its total funding over the last ten years.
