The UK and US have reached a landmark commercial pact that will guarantee no levies on UK medicine exports being sold in the American market.
The Terms of the Accord
In exchange for the tariff guarantee, the UK has pledged to boost spending on pharmaceuticals through the public health system. This move ensures that tariffs on these crucial products will remain at zero for a timeframe of three years.
This deal follows earlier statements to hike import taxes on branded pharmaceutical imports, with potential rates discussed up to double the cost.
"This arrangement with the UK bolsters the global environment for new treatments and introduces much-needed equity to American-British medicine commerce," a statement said.
Commercial Significance
Medicines represent one of the the United Kingdom's largest goods shipped to the US, which is clearly the biggest market for large companies like GSK and AstraZeneca.
Statistics reveal that in the year prior to September, the UK sold pharmaceutical products totaling over eleven billion pounds to the US. This value accounted for nearly one-fifth of total UK exports in that period.
"This deal safeguards work, stimulates investment and facilitates the UK to become a international leader for medical research," a minister stated.
Specific NHS Changes
The pact involves several specific commitments from the United Kingdom:
- Higher Cost Ceiling: The UK will increase the price threshold at which it considers new medicines to be too expensive by a quarter.
- Increased NHS Spending: There is a goal to double overall NHS spending on treatments from 0.3% of the national economy to 0.6 percent over the next decade.
- Refund Ceiling: The amount drug companies must return to the NHS to stay within budget will be restricted at fifteen percent. In the past, refunds exceeded 20%.
Broader Context
The deal follows a protracted row between the drug companies and the UK government over spending levels and approval rates.
This friction were exacerbated by assertions that US patients were paying a premium for the same drugs than consumers in the Britain and the EU.
Over the last 18 months, several significant pharmaceutical investments in the UK have been delayed or scrapped, while substantial funding commitments have been directed toward American operations.
The Science Minister stated that the NHS needed to spend more on treatments, noting that its budget allocation on drugs had decreased as a percentage of its resources over the previous ten-year period.
