The United Kingdom and the United States have reached a major commercial pact that will ensure no import taxes on UK medicine products going into the US market.
The Terms of the Accord
In exchange for the tariff guarantee, the UK has agreed to boost spending on medicines through the NHS. This commitment secures that import taxes on these crucial goods will remain at zero for a timeframe of 36 months.
This agreement comes after recent statements to hike duties on branded drug products, with figures discussed up to 100%.
"This agreement between the Britain reinforces the international landscape for innovative medicines and brings long-overdue balance to U.S.–U.K. pharmaceutical trade," a statement said.
Economic Significance
Medicines represent one of the the United Kingdom's biggest goods shipped to the United States, which is clearly the biggest destination for major UK drugmakers.
Export figures indicate that in the year prior to last September, the UK exported medicines totaling over eleven billion pounds to the US. This amount represented 17.4% of all goods exports in that span.
"This guarantee safeguards employment, increases 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.
Specific UK Commitments
The agreement includes several specific changes from the UK:
- Price Threshold Increase: The UK will increase the price threshold at which it deems new therapies to be prohibitively costly by a quarter.
- Higher Drug Budget: There is a goal to raise total NHS spending on medicines from 0.3% of GDP to 0.6 percent 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. In the past, refunds exceeded 20%.
Industry Background
This agreement follows a long-running tension between the sector and the ministers over spending levels and NHS adoption.
The disagreement were intensified by assertions that US patients were charged a premium for the equivalent treatments than patients in the other developed nations.
Over the last 18 months, several major drug company projects in the UK have been halted or scrapped, while major investments have been pledged toward American operations.
One official acknowledged that the NHS needed to spend more on medicines, noting that its expenditure on drugs had decreased as a percentage of its total funding over the past decade.
