The UK and US have announced a major commercial pact that will maintain zero levies on UK medicine exports being sold in the American market.
The Terms of the Accord
Under the terms of the agreement, the UK has committed to increase expenditure on medicines through the NHS. This commitment secures that duties on these key exports will remain at zero for a period of the next three years.
This agreement comes after recent statements to dramatically increase import taxes on branded drug imports, with figures floated up to one hundred percent.
"This deal with the UK bolsters the global environment for new treatments and introduces long-overdue balance to U.S.–U.K. medicine commerce," an announcement said.
Commercial Significance
Pharmaceuticals are one of the the United Kingdom's largest exports to the US, which is by far the primary destination for leading companies like GSK and AstraZeneca.
Statistics reveal that in the 12 months leading up to the third quarter, the UK shipped drugs totaling over eleven billion pounds to the US. This amount made up a significant portion of total UK exports in that timeframe.
"This deal safeguards employment, stimulates investment and paves the way for the UK to establish itself as a global hub for life sciences," the Business and Trade Secretary stated.
Specific UK Commitments
The pact entails several notable pledges from the British government:
- Revised Affordability Limit: The UK will lift the cost ceiling at which it considers new treatments to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a aim to raise overall health service expenditure on treatments from 0.3 percent of GDP to 0.6 percent over the next decade.
- Rebate Cap: The amount drug companies must return to the NHS to stay within budget will be restricted at 15%. In the past, repayments exceeded twenty percent.
Recent Tensions
This agreement takes place against a ongoing tension between the drug companies and the British authorities over drug pricing and NHS adoption.
This friction were intensified by claims that US customers were paying several times more for the same drugs than patients in the other developed nations.
In recent months, several large pharmaceutical investments in the UK have been delayed or cancelled, while substantial funding commitments have been directed toward projects in the United States.
A senior figure acknowledged that the NHS needed to increase expenditure on treatments, noting that its expenditure on drugs had declined as a percentage of its resources over the past decade.
