The UK and US have reached a landmark trade agreement that will preserve no tariffs on British drug exports entering the American market.
Key Provisions of the Accord
In exchange for the tariff guarantee, the UK has agreed to increase funding on pharmaceuticals through the National Health Service (NHS). This pledge ensures that duties on these key products will remain at zero for a duration of 36 months.
This deal is in response to earlier threats to hike import taxes on patented pharmaceutical products, with figures discussed as high as 100%.
"This deal between the United Kingdom reinforces the worldwide climate for cutting-edge drugs and introduces long-overdue balance to U.S.–U.K. drug exports," a release declared.
Trade Impact
Pharmaceuticals constitute one of the the United Kingdom's biggest export categories to the America, which is by far the largest buyer for leading companies like GSK and AstraZeneca.
Statistics indicate that in the 12 months leading up to last September, the UK exported pharmaceutical products valued at £11.1bn to the US. This amount represented nearly one-fifth of British export trade in that period.
"This agreement secures employment, stimulates funding and paves the way for the UK to become a international leader for medical research," the Business and Trade Secretary remarked.
Key NHS Changes
The deal includes several notable commitments from the British government:
- Higher Cost Ceiling: The UK will increase the cost ceiling at which it considers new treatments to be prohibitively costly by twenty-five percent.
- Higher Drug Budget: There is a target to raise overall NHS spending on treatments from 0.3% of GDP to 0.6% over the following ten-year period.
- Payback Limit: The amount pharmaceutical firms must return to the NHS to stay within budget will be restricted at 15%. Previously, repayments were more than twenty percent.
Industry Background
The deal follows a ongoing row between the drug companies and the ministers over medicine costs and NHS adoption.
The disagreement were exacerbated by assertions that American patients were charged a premium for the same drugs than people in the UK and Europe.
Recently, several large pharmaceutical investments in the UK have been delayed or cancelled, while substantial funding commitments have been announced toward American operations.
The Science Minister stated that the NHS needed to increase expenditure on drugs, noting that its expenditure on drugs had declined as a share of its overall budget over the past decade.
