The United Kingdom and the United States have secured a landmark commercial pact that will ensure no duties on UK drug products going into the US market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has agreed to boost spending on medicines through the NHS. This pledge ensures that import taxes on these key exports will remain at zero for a period of 36 months.
This agreement follows recent statements to hike tariffs on patented pharmaceutical imports, with figures discussed as high as 100%.
"This agreement with the Britain reinforces the international landscape for new treatments and introduces much-needed fairness to transatlantic pharmaceutical trade," a release declared.
Commercial Importance
Drugs represent one of the the United Kingdom's largest exports to the US, which is by far the biggest buyer for large UK drugmakers.
Export figures show that in the 12 months to the end of the third quarter, the UK sold drugs worth £11.1bn to the US. This figure represented nearly one-fifth of all goods exports in that timeframe.
"This guarantee protects jobs, stimulates investment and facilitates the UK to emerge as a international leader for biotech and pharma," a government official remarked.
Key British Pledges
The deal entails several notable changes from the British government:
- Price Threshold Increase: The UK will lift the affordability limit at which it deems new therapies to be unaffordable by 25%.
- Boosted Medicine Funding: There is a aim to increase total NHS spending on drugs from 0.3 percent of Gross Domestic Product to 0.6% over the next decade.
- Payback Limit: The amount pharmaceutical firms must pay back to the NHS to stay within budget will be capped at 15%. Previously, refunds exceeded 20%.
Recent Tensions
This agreement comes amid a long-running tension between the sector and the British authorities over medicine costs and regulatory access.
This friction were heightened by arguments that US customers were paying a premium for the same drugs than consumers in the Britain and the EU.
Over the last 18 months, several large drug company projects in the UK have been delayed or abandoned, while substantial funding commitments have been directed toward projects in the United States.
The Science Minister stated that the NHS must invest a greater share on medicines, noting that its budget allocation on drugs had decreased as a percentage of its overall budget over the previous ten-year period.
