The UK and US have signed a major trade agreement that will preserve no import taxes on British medicine products being sold in the US market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has committed to increase spending on drugs through the NHS. This commitment secures that import taxes on these key products will be held at zero for a timeframe of the next three years.
This deal comes after recent threats to dramatically increase tariffs on patented drug products, with figures mentioned up to double the cost.
"This agreement between the UK strengthens the worldwide climate for cutting-edge drugs and establishes much-needed balance to transatlantic medicine commerce," an announcement noted.
Commercial Impact
Pharmaceuticals represent one of the the United Kingdom's largest export categories to the United States, which is by far the largest market for leading British pharmaceutical firms.
Trade data reveal that in the year to the end of last September, the UK exported medicines valued at billions to the US. This value represented nearly one-fifth of British export trade in that period.
"This agreement safeguards employment, boosts capital expenditure and paves the way for the UK to become a international leader for life sciences," the Business and Trade Secretary remarked.
Specific British Pledges
The agreement entails several specific pledges from the United Kingdom:
- Price Threshold Increase: The UK will lift the price threshold at which it deems new therapies to be unaffordable by 25%.
- Boosted Medicine Funding: There is a goal to increase total NHS spending on drugs from 0.3% of the national economy to 0.6% over the coming ten years.
- Refund Ceiling: The amount drug companies must return to the NHS to prevent overspending will be capped at 15%. In the past, rebates exceeded twenty percent.
Recent Tensions
This agreement follows a long-running tension between the sector and the UK government over medicine costs and approval rates.
This friction were exacerbated by claims that American customers were paying a premium for the same drugs than patients in the UK and Europe.
Over the last 18 months, several major pharmaceutical investments in the UK have been halted or abandoned, while substantial funding commitments have been directed toward projects in the United States.
A senior figure acknowledged that the NHS needed to invest a greater share on drugs, noting that its budget allocation on drugs had shrunk as a share of its total funding over the previous ten-year period.
