Britain and America have secured a major bilateral deal that will guarantee no tariffs on British pharmaceutical shipments entering the US market.
Agreement Details of the Deal
In exchange for the tariff guarantee, the UK has agreed to raise spending on drugs through the public health system. This pledge guarantees that import taxes on these key products will remain at zero for a timeframe of the next three years.
This development comes after previous warnings to significantly raise duties on patented drug products, with increases discussed up to double the cost.
"This deal with the UK strengthens the international landscape for cutting-edge drugs and brings long-overdue fairness to American-British pharmaceutical trade," a release said.
Commercial Importance
Medicines represent one of the Britain's biggest export categories to the US, which is clearly the largest market for leading UK drugmakers.
Statistics indicate that in the one-year period prior to September, the UK sold medicines valued at billions to the US. This value accounted for 17.4% of total UK exports in that span.
"This agreement protects employment, increases investment and sets the stage for the UK to become a worldwide center for life sciences," the Business and Trade Secretary stated.
Key British Pledges
The deal entails several specific pledges from the United Kingdom:
- Higher Cost Ceiling: The UK will lift the price threshold at which it considers new therapies to be prohibitively costly by 25%.
- Increased NHS Spending: There is a target to double total health service expenditure on medicines from 0.3% of GDP to 0.6 percent over the next decade.
- Rebate Cap: The percentage drug companies must return to the NHS to control costs will be capped at 15%. Previously, refunds exceeded 20%.
Industry Background
This agreement takes place against a ongoing tension between the drug companies and the ministers over spending levels and approval rates.
This friction were intensified by assertions that American patients were paying a premium for the same drugs than consumers in the Britain and the EU.
Over the last 18 months, several major pharmaceutical investments in the UK have been paused or scrapped, while multi-billion-dollar funding commitments have been pledged toward projects in the United States.
One official stated that the NHS needed to spend more on medicines, noting that its expenditure on drugs had shrunk as a proportion of its overall budget over the past decade.
