The UK and US have signed a major bilateral deal that will maintain no tariffs on UK pharmaceutical shipments entering the US market.
Agreement Details of the Accord
In exchange for the tariff guarantee, the UK has committed to increase spending on drugs through the National Health Service (NHS). This commitment guarantees that tariffs on these crucial goods will stay at zero for a period of three years.
This deal follows recent threats to hike import taxes on patented drug products, with figures floated up to one hundred percent.
"This arrangement with the United Kingdom reinforces the global environment for new treatments and establishes much-needed equity to American-British drug exports," an announcement noted.
Trade Impact
Pharmaceuticals are one of the the United Kingdom's most significant exports to the America, which is clearly the largest market for major companies like GSK and AstraZeneca.
Export figures indicate that in the 12 months leading up to September, the UK shipped pharmaceutical products valued at £11.1bn to the US. This value represented a significant portion of total UK exports in that period.
"This guarantee safeguards jobs, increases investment and sets the stage for the UK to establish itself as a global hub for life sciences," the Business and Trade Secretary remarked.
Specific UK Commitments
The deal includes several key changes from the United Kingdom:
- Higher Cost Ceiling: The UK will raise the cost ceiling at which it judges new treatments to be too expensive by a quarter.
- Increased NHS Spending: There is a target to double total NHS spending on drugs from 0.3% of the national economy to 0.6% over the following ten-year period.
- Payback Limit: The sum drug companies must pay back to the NHS to stay within budget will be restricted at 15%. Previously, rebates were more than twenty percent.
Recent Tensions
The deal takes place against a protracted tension between the sector and the ministers over drug pricing and approval rates.
The disagreement were heightened by arguments that US consumers were paying significantly more for the equivalent treatments than patients in the UK and Europe.
In recent months, several large drug company projects in the UK have been delayed or abandoned, while substantial investments have been announced toward American operations.
A senior figure acknowledged that the NHS had to increase expenditure on drugs, noting that its expenditure on drugs had shrunk as a percentage of its resources over the last ten years.
