The UK and US have forged a major trade agreement that will maintain zero duties on UK pharmaceutical shipments being sold in the American market.
Agreement Details of the Pact
Under the terms of the agreement, the UK has committed to raise funding on drugs through the National Health Service (NHS). This commitment ensures that tariffs on these vital products will stay at nothing for a timeframe of the next three years.
This deal is in response to earlier threats to dramatically increase duties on patented drug products, with potential rates floated up to 100%.
"This agreement between the UK strengthens the international landscape for new treatments and introduces long-overdue balance to transatlantic drug exports," a release noted.
Economic Importance
Pharmaceuticals are one of the UK's largest goods shipped to the United States, which is clearly the largest buyer for leading companies like GSK and AstraZeneca.
Export figures show that in the one-year period prior to the third quarter, the UK sold medicines valued at £11.1bn to the US. This amount made up nearly one-fifth of total UK exports in that timeframe.
"This deal secures employment, boosts investment and paves the way for the UK to become a international leader for biotech and pharma," a minister stated.
Detailed UK Commitments
The deal includes several key commitments from the United Kingdom:
- Revised Affordability Limit: The UK will increase the cost ceiling at which it deems new treatments to be too expensive by 25%.
- Increased NHS Spending: There is a goal to double overall NHS spending on medicines from 0.3% of GDP to 0.6 percent over the following ten-year period.
- Rebate Cap: The amount pharmaceutical firms must pay back to the NHS to control costs will be restricted at 15%. Previously, repayments were more than 20%.
Recent Tensions
The deal follows a protracted row between the drug companies and the UK government over spending levels and regulatory access.
These tensions were heightened by assertions that US consumers were charged a premium for the equivalent treatments than consumers in the other developed nations.
In recent months, several major manufacturing plans in the UK have been halted or cancelled, while multi-billion-dollar expansions have been pledged toward US facilities.
The Science Minister stated that the NHS must increase expenditure on treatments, noting that its expenditure on drugs had decreased as a percentage of its resources over the last ten years.
