Britain and America have agreed to a landmark trade agreement that will maintain zero levies on UK pharmaceutical products entering the US market.
Key Provisions of the Deal
In exchange for the tariff guarantee, the UK has agreed to increase funding on drugs through the public health system. This move guarantees that duties on these key goods will be held at zero for a timeframe of the next three years.
This deal follows recent threats to hike import taxes on branded drug imports, with figures floated as high as double the cost.
"This arrangement with the UK strengthens the international landscape for new treatments and establishes long-overdue equity to transatlantic pharmaceutical trade," a release said.
Economic Impact
Pharmaceuticals represent one of the Britain's most significant goods shipped to the United States, which is clearly the biggest market for major companies like GSK and AstraZeneca.
Export figures show that in the 12 months prior to the third quarter, the UK shipped drugs valued at over eleven billion pounds to the US. This amount represented nearly one-fifth of total UK exports in that timeframe.
"This guarantee protects employment, stimulates investment and paves the way for the UK to establish itself as a international leader for biotech and pharma," the Business and Trade Secretary commented.
Specific British Pledges
The deal involves several key changes from the United Kingdom:
- Revised Affordability Limit: The UK will raise the price threshold at which it considers new therapies to be unaffordable by 25%.
- Higher Drug Budget: There is a target to raise total health service expenditure on drugs from 0.3% of Gross Domestic Product to 0.6% over the next decade.
- Refund Ceiling: The sum manufacturers must refund to the NHS to control costs will be limited at 15%. Previously, repayments were more than 20%.
Broader Context
This agreement takes place against a long-running dispute between the pharmaceutical industry and the British authorities over medicine costs and NHS adoption.
The disagreement were intensified by claims that American customers were charged significantly more for the same drugs than people in the Britain and the EU.
Over the last 18 months, several significant drug company projects in the UK have been paused or cancelled, while multi-billion-dollar expansions have been directed toward US facilities.
One official publicly accepted that the NHS needed to spend more on treatments, noting that its spending on drugs had decreased as a percentage of its overall budget over the previous ten-year period.
