The United Kingdom and the United States have signed a significant bilateral deal that will guarantee no duties on UK drug products being sold in the American market.
The Terms of the Deal
In exchange for the tariff guarantee, the UK has committed to raise spending on drugs through the National Health Service (NHS). This commitment secures that duties on these crucial exports will be held at zero for a duration of 36 months.
This agreement is in response to recent warnings to significantly raise duties on branded drug products, with increases discussed as high as 100%.
"This deal with the UK bolsters the global environment for innovative medicines and establishes much-needed balance to American-British pharmaceutical trade," an announcement said.
Economic Impact
Drugs represent one of the UK's largest export categories to the United States, which is clearly the largest buyer for major UK drugmakers.
Export figures show that in the year leading up to last September, the UK sold drugs totaling £11.1bn to the US. This amount accounted for 17.4% of all goods exports in that timeframe.
"This deal protects work, stimulates capital expenditure and sets the stage for the UK to emerge as a worldwide center for medical research," the Business and Trade Secretary remarked.
Specific British Pledges
The deal entails several specific pledges from the British government:
- Revised Affordability Limit: The UK will lift the affordability limit at which it judges new treatments to be prohibitively costly by twenty-five percent.
- Increased NHS Spending: There is a aim to increase overall NHS spending on medicines from 0.3% of Gross Domestic Product to 0.6% over the next decade.
- Rebate Cap: The percentage manufacturers must pay back to the NHS to control costs will be restricted at 15%. In the past, repayments exceeded twenty percent.
Recent Tensions
The pact takes place against a long-running tension between the pharmaceutical industry and the UK government over drug pricing and NHS adoption.
The disagreement were exacerbated by assertions that American patients were paying significantly more for the same drugs than patients in the other developed nations.
Recently, several large manufacturing plans in the UK have been paused or abandoned, while multi-billion-dollar funding commitments have been announced toward projects in the United States.
The Science Minister acknowledged that the NHS needed to invest a greater share on drugs, noting that its expenditure on drugs had declined as a percentage of its total funding over the past decade.
