Britain and America have hammered out a landmark trade agreement that will keep zero levies on UK drug products entering the US market.
Key Provisions of the Pact
As part of the deal, the UK has pledged to boost spending on pharmaceuticals through the public health system. This pledge ensures that import taxes on these vital products will be held at nothing for a period of 36 months.
This development is in response to earlier warnings to significantly raise duties on branded drug products, with potential rates floated as high as double the cost.
"This deal between the United Kingdom bolsters the global environment for new treatments and introduces much-needed fairness to American-British drug exports," a release said.
Trade Significance
Pharmaceuticals are one of the UK's biggest exports to the United States, which is easily the largest buyer for leading companies like GSK and AstraZeneca.
Statistics reveal that in the 12 months prior to last September, the UK shipped medicines worth billions to the US. This amount made up a significant portion of all goods exports in that timeframe.
"This agreement protects work, stimulates funding and sets the stage for the UK to become a worldwide center for biotech and pharma," the Business and Trade Secretary stated.
Detailed NHS Changes
The deal involves several notable changes from the United Kingdom:
- Higher Cost Ceiling: The UK will raise the price threshold at which it deems new medicines to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a goal to double total public funding on drugs from 0.3% of GDP to 0.6 percent over the coming ten years.
- Refund Ceiling: The sum drug companies must refund to the NHS to control costs will be restricted at 15%. In the past, repayments exceeded 20%.
Recent Tensions
The pact comes amid a protracted dispute between the drug companies and the UK government over drug pricing and approval rates.
This friction were intensified by claims that US customers were paying several times more for the same drugs than patients in the Britain and the EU.
Recently, several large drug company projects in the UK have been delayed or scrapped, while multi-billion-dollar investments have been announced toward projects in the United States.
One official stated that the NHS had to spend more on drugs, noting that its spending on drugs had decreased as a percentage of its overall budget over the past decade.
