The United Kingdom and the United States have agreed to a important bilateral deal that will preserve zero levies on British medicine exports being sold in the American market.
Agreement Details of the Accord
Under the terms of the agreement, the UK has pledged to boost funding on pharmaceuticals through the NHS. This move guarantees that import taxes on these key exports will remain at zero for a duration of the next three years.
This deal comes after previous warnings to dramatically increase import taxes on patented drug imports, with figures discussed as high as 100%.
"This agreement between the Britain strengthens the international landscape for cutting-edge drugs and introduces much-needed equity to American-British pharmaceutical trade," a release declared.
Economic Impact
Medicines represent one of the UK's most significant exports to the America, which is easily the primary destination for leading companies like GSK and AstraZeneca.
Trade data show that in the 12 months to the end of last September, the UK shipped medicines totaling billions to the US. This value made up a significant portion of total UK exports in that timeframe.
"This agreement secures work, increases investment and facilitates the UK to establish itself as a international leader for life sciences," the Business and Trade Secretary remarked.
Detailed UK Commitments
The deal includes several specific commitments from the United Kingdom:
- Higher Cost Ceiling: The UK will raise the cost ceiling at which it judges new medicines to be unaffordable by a quarter.
- Increased NHS Spending: There is a aim to increase total NHS spending on drugs from 0.3 percent of the national economy to 0.6% over the next decade.
- Payback Limit: The amount manufacturers must pay back to the NHS to control costs will be capped at 15%. Previously, rebates were more than 20%.
Broader Context
The deal follows a long-running dispute between the pharmaceutical industry and the UK government over drug pricing and approval rates.
This friction were intensified by arguments that US consumers were charged a premium for the same drugs than consumers in the Britain and the EU.
Recently, several significant manufacturing plans in the UK have been paused or abandoned, while multi-billion-dollar investments have been announced toward US facilities.
One official acknowledged that the NHS must spend more on drugs, noting that its spending on drugs had declined as a percentage of its total funding over the past decade.
