The United Kingdom and the United States have secured a major trade agreement that will ensure zero tariffs on UK pharmaceutical exports being sold in the US market.
Agreement Details of the Accord
As part of the deal, the UK has agreed to increase funding on drugs through the National Health Service (NHS). This commitment secures that duties on these crucial products will remain at zero for a period of the next three years.
This agreement comes after previous threats to significantly raise import taxes on branded pharmaceutical products, with figures discussed up to double the cost.
"This agreement with the United Kingdom reinforces the worldwide climate for cutting-edge drugs and introduces much-needed fairness to transatlantic medicine commerce," a release said.
Commercial Impact
Medicines are one of the the United Kingdom's largest exports to the US, which is clearly the largest market for leading British pharmaceutical firms.
Trade data indicate that in the 12 months prior to September, the UK sold medicines worth billions to the US. This amount represented nearly one-fifth of British export trade in that timeframe.
"This guarantee protects employment, boosts funding and facilitates the UK to emerge as a international leader for life sciences," the Business and Trade Secretary commented.
Key British Pledges
The deal involves several notable pledges from the United Kingdom:
- Higher Cost Ceiling: The UK will raise the cost ceiling at which it considers new medicines to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a target to increase overall public funding on drugs from 0.3 percent of Gross Domestic Product to 0.6 percent over the next decade.
- Rebate Cap: The percentage drug companies must pay back to the NHS to control costs will be restricted at 15%. Last year, repayments topped twenty percent.
Industry Background
This agreement comes amid a protracted row between the sector and the British authorities over medicine costs and NHS adoption.
This friction were exacerbated by arguments that US consumers were charged several times more for the equivalent treatments than people in the other developed nations.
Over the last 18 months, several significant manufacturing plans in the UK have been delayed or scrapped, while multi-billion-dollar funding commitments have been announced toward projects in the United States.
A senior figure stated that the NHS must invest a greater share on treatments, noting that its budget allocation on drugs had declined as a percentage of its resources over the last ten years.
