The United Kingdom and the United States have concluded a landmark trade agreement that will guarantee no duties on UK drug exports being sold in the US market.
The Terms of the Deal
In exchange for the tariff guarantee, the UK has committed to increase funding on medicines through the public health system. This pledge ensures that import taxes on these key exports will be held at nothing for a period of the next three years.
This deal comes after earlier warnings to dramatically increase tariffs on patented drug products, with increases mentioned up to 100%.
"This arrangement with the Britain reinforces the global environment for new treatments and introduces long-overdue fairness to American-British drug exports," a statement noted.
Trade Significance
Pharmaceuticals represent one of the the United Kingdom's most significant goods shipped to the United States, which is by far the primary destination for large UK drugmakers.
Export figures show that in the 12 months prior to last September, the UK shipped drugs valued at £11.1bn to the US. This value accounted for 17.4% of British export trade in that period.
"This guarantee safeguards employment, boosts funding and sets the stage for the UK to establish itself as a global hub for medical research," the Business and Trade Secretary remarked.
Specific NHS Changes
The deal includes several notable pledges from the UK:
- Higher Cost Ceiling: The UK will lift the price threshold at which it considers new medicines to be too expensive by twenty-five percent.
- Higher Drug Budget: There is a goal to increase total health service expenditure on medicines from 0.3% of Gross Domestic Product to 0.6 percent over the coming ten years.
- Refund Ceiling: The amount manufacturers must refund to the NHS to stay within budget will be capped at 15%. Previously, repayments were more than twenty percent.
Industry Background
The pact takes place against a ongoing tension between the sector and the ministers over spending levels and NHS adoption.
These tensions were intensified by claims that US patients were charged a premium for the equivalent treatments than people in the other developed nations.
Over the last 18 months, several major manufacturing plans in the UK have been halted or cancelled, while major expansions have been announced toward US facilities.
The Science Minister publicly accepted that the NHS needed to increase expenditure on drugs, noting that its spending on drugs had shrunk as a share of its resources over the last ten years.
