The United Kingdom and the United States have announced a landmark trade agreement that will maintain no tariffs on UK medicine exports being sold in the US market.
Agreement Details of the Accord
Under the terms of the agreement, the UK has pledged to increase expenditure on drugs through the National Health Service (NHS). This pledge ensures that import taxes on these vital goods will be held at zero for a period of three years.
This deal comes after recent statements to hike duties on branded pharmaceutical products, with potential rates floated as high as 100%.
"This arrangement with the UK strengthens the global environment for innovative medicines and introduces long-overdue balance to American-British pharmaceutical trade," an announcement noted.
Economic Impact
Drugs represent one of the the United Kingdom's largest exports to the America, which is clearly the primary market for major companies like GSK and AstraZeneca.
Export figures indicate that in the one-year period leading up to September, the UK shipped medicines valued at over eleven billion pounds to the US. This value represented a significant portion of British export trade in that timeframe.
"This deal protects employment, boosts capital expenditure and paves the way for the UK to emerge as a worldwide center for life sciences," a minister commented.
Detailed UK Commitments
The deal involves several notable commitments from the British government:
- Price Threshold Increase: The UK will increase the price threshold at which it considers new therapies to be unaffordable by a quarter.
- Boosted Medicine Funding: There is a goal to increase overall health service expenditure on treatments from 0.3% of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Refund Ceiling: The percentage drug companies must refund to the NHS to control costs will be capped at fifteen percent. Previously, refunds were more than twenty percent.
Industry Background
This agreement takes place against a ongoing tension between the sector and the ministers over spending levels and regulatory access.
The disagreement were exacerbated by arguments that US patients were charged significantly more for the equivalent treatments than patients in the other developed nations.
Recently, several significant manufacturing plans in the UK have been delayed or abandoned, while major funding commitments have been pledged toward projects in the United States.
The Science Minister stated that the NHS had to invest a greater share on treatments, noting that its spending on drugs had decreased as a percentage of its overall budget over the past decade.
