Britain and America have established a major trade agreement that will keep zero duties on British medicine shipments being sold in the American market.
The Terms of the Deal
Under the terms of the agreement, the UK has pledged to boost expenditure on drugs through the NHS. This commitment guarantees that tariffs on these crucial goods will be held at nothing for a period of 36 months.
This deal comes after previous warnings to hike tariffs on patented pharmaceutical imports, with potential rates mentioned as high as double the cost.
"This agreement between the UK reinforces the global environment for cutting-edge drugs and brings much-needed fairness to transatlantic pharmaceutical trade," a release said.
Economic Significance
Pharmaceuticals represent one of the Britain's biggest exports to the US, which is clearly the biggest market for major British pharmaceutical firms.
Export figures show that in the 12 months to the end of September, the UK sold pharmaceutical products valued at £11.1bn to the US. This value represented 17.4% of all goods exports in that timeframe.
"This agreement safeguards work, stimulates funding and facilitates the UK to establish itself as a worldwide center for medical research," the Business and Trade Secretary stated.
Specific NHS Changes
The deal entails several specific changes from the British government:
- Revised Affordability Limit: The UK will increase the cost ceiling at which it considers new medicines to be unaffordable by twenty-five percent.
- Higher Drug Budget: There is a aim to raise overall public funding on drugs from 0.3 percent of GDP to 0.6% over the following ten-year period.
- Refund Ceiling: The amount pharmaceutical firms must pay back to the NHS to control costs will be capped at 15%. In the past, rebates topped 20%.
Industry Background
The deal comes amid a ongoing tension between the sector and the British authorities over medicine costs and NHS adoption.
These tensions were heightened by claims that US consumers were paying significantly more for the equivalent treatments than consumers in the UK and Europe.
Over the last 18 months, several large manufacturing plans in the UK have been delayed or scrapped, while substantial investments have been announced toward US facilities.
One official publicly accepted that the NHS had to spend more on treatments, noting that its budget allocation on drugs had declined as a percentage of its overall budget over the last ten years.
