The UK and US have concluded a important bilateral deal that will maintain zero import taxes on UK pharmaceutical exports going into the American market.
The Terms of the Deal
As part of the deal, the UK has agreed to raise expenditure on drugs through the NHS. This pledge ensures that duties on these vital goods will stay at nothing for a duration of three years.
This deal follows previous threats to hike duties on patented drug products, with potential rates mentioned as high as double the cost.
"This deal with the Britain bolsters the international landscape for new treatments and brings much-needed equity to American-British drug exports," a statement noted.
Trade Significance
Drugs represent one of the the United Kingdom's largest exports to the America, which is by far the primary market for large British pharmaceutical firms.
Export figures show that in the one-year period to the end of the third quarter, the UK shipped drugs totaling £11.1bn to the US. This figure made up 17.4% of all goods exports in that period.
"This deal safeguards work, stimulates capital expenditure and facilitates the UK to establish itself as a international leader for biotech and pharma," the Business and Trade Secretary remarked.
Detailed UK Commitments
The pact entails several specific pledges from the British government:
- Higher Cost Ceiling: The UK will increase the price threshold at which it considers new therapies to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a target to double overall NHS spending on treatments from 0.3 percent of GDP to 0.6% over the next decade.
- Rebate Cap: The sum pharmaceutical firms must refund to the NHS to control costs will be restricted at 15%. Last year, rebates topped 20%.
Industry Background
The pact follows a protracted row between the pharmaceutical industry and the British authorities over medicine costs and NHS adoption.
This friction were intensified by arguments that US patients were charged several times more for the equivalent treatments than patients in the UK and Europe.
Over the last 18 months, several major pharmaceutical investments in the UK have been halted or abandoned, while multi-billion-dollar expansions have been pledged toward US facilities.
A senior figure stated that the NHS needed to increase expenditure on drugs, noting that its spending on drugs had shrunk as a percentage of its total funding over the past decade.
