The UK and US have finalized a significant trade agreement that will ensure zero levies on UK pharmaceutical products entering the American market.
The Terms of the Deal
Under the terms of the agreement, the UK has agreed to raise funding on medicines through the National Health Service (NHS). This move secures that duties on these key products will stay at zero for a duration of the next three years.
This deal is in response to recent statements to significantly raise import taxes on patented drug imports, with increases mentioned up to 100%.
"This deal between the UK reinforces the worldwide climate for cutting-edge drugs and introduces long-overdue equity to transatlantic drug exports," a release noted.
Commercial Impact
Pharmaceuticals represent one of the the United Kingdom's biggest exports to the United States, which is clearly the biggest destination for major UK drugmakers.
Trade data show that in the year to the end of the third quarter, the UK shipped medicines worth £11.1bn to the US. This figure represented nearly one-fifth of total UK exports in that timeframe.
"This guarantee protects employment, boosts capital expenditure and facilitates the UK to become a global hub for medical research," the Business and Trade Secretary commented.
Key British Pledges
The agreement involves several key pledges from the UK:
- Revised Affordability Limit: The UK will increase the affordability limit at which it considers new treatments to be unaffordable by twenty-five percent.
- Higher Drug Budget: There is a aim to double total public funding on medicines from 0.3 percent of the national economy to 0.6 percent over the following ten-year period.
- Refund Ceiling: The sum pharmaceutical firms must refund to the NHS to stay within budget will be capped at fifteen percent. Previously, rebates topped 20%.
Broader Context
The deal comes amid a ongoing dispute between the sector and the UK government over spending levels and NHS adoption.
The disagreement were heightened by arguments that US patients were charged a premium for the equivalent treatments than patients in the other developed nations.
Over the last 18 months, several significant drug company projects in the UK have been delayed or cancelled, while substantial expansions have been announced toward American operations.
One official acknowledged that the NHS must spend more on drugs, noting that its spending on drugs had shrunk as a percentage of its overall budget over the previous ten-year period.
