The United Kingdom and the United States have signed a major trade agreement that will maintain no duties on British medicine products entering the US market.
Key Provisions of the Accord
In exchange for the tariff guarantee, the UK has agreed to increase spending on medicines through the NHS. This pledge secures that duties on these vital products will be held at zero for a timeframe of the next three years.
This deal is in response to earlier warnings to dramatically increase duties on branded drug products, with increases discussed as high as double the cost.
"This deal with the United Kingdom bolsters the international landscape for innovative medicines and introduces long-overdue fairness to transatlantic medicine commerce," a statement said.
Commercial Impact
Pharmaceuticals are one of the UK's biggest export categories to the United States, which is by far the biggest buyer for leading UK drugmakers.
Export figures show that in the 12 months to the end of September, the UK shipped medicines totaling over eleven billion pounds to the US. This value represented a significant portion of total UK exports in that span.
"This guarantee protects work, increases funding and facilitates the UK to become a global hub for life sciences," a government official commented.
Specific NHS Changes
The deal entails several specific commitments from the British government:
- Price Threshold Increase: The UK will increase the affordability limit at which it deems new therapies to be unaffordable by 25%.
- Higher Drug Budget: There is a target to raise overall public funding on treatments from 0.3 percent of GDP to 0.6 percent over the following ten-year period.
- Refund Ceiling: The sum manufacturers must pay back to the NHS to stay within budget will be limited at fifteen percent. Previously, repayments exceeded 20%.
Industry Background
This agreement comes amid a protracted row between the drug companies and the ministers over medicine costs and NHS adoption.
These tensions were exacerbated by arguments that American patients were paying several times more for the identical medicines than consumers in the UK and Europe.
Over the last 18 months, several major manufacturing plans in the UK have been delayed or abandoned, while multi-billion-dollar expansions have been directed toward projects in the United States.
One official stated that the NHS had to increase expenditure on drugs, noting that its spending on drugs had shrunk as a share of its overall budget over the previous ten-year period.
