The United Kingdom and the United States have reached a key bilateral deal that will preserve zero import taxes on UK pharmaceutical shipments entering the US market.
The Terms of the Accord
Under the terms of the agreement, the UK has agreed to increase expenditure on pharmaceuticals through the NHS. This move ensures that tariffs on these vital exports will stay at zero for a duration of three years.
This deal comes after earlier threats to significantly raise tariffs on patented pharmaceutical imports, with figures discussed reaching 100%.
"This agreement with the United Kingdom strengthens the worldwide climate for cutting-edge drugs and brings long-overdue fairness to U.S.–U.K. pharmaceutical trade," a release noted.
Commercial Importance
Medicines constitute one of the Britain's most significant exports to the US, which is by far the primary market for major companies like GSK and AstraZeneca.
Export figures reveal that in the year prior to last September, the UK sold medicines worth billions to the US. This figure represented a significant portion of total UK exports in that timeframe.
"This agreement protects employment, boosts capital expenditure and paves the way for the UK to emerge as a global hub for biotech and pharma," a minister commented.
Specific NHS Changes
The agreement includes several specific pledges from the British government:
- Price Threshold Increase: The UK will raise the cost ceiling at which it judges new medicines to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a target to raise total health service expenditure on medicines from 0.3 percent of the national economy to 0.6% over the next decade.
- Refund Ceiling: The percentage pharmaceutical firms must return to the NHS to control costs will be capped at fifteen percent. Last year, refunds were more than 20%.
Industry Background
This agreement follows a protracted tension between the drug companies and the ministers over medicine costs and approval rates.
These tensions were exacerbated by assertions that American consumers were paying significantly more for the equivalent treatments than patients in the UK and Europe.
Over the last 18 months, several significant manufacturing plans in the UK have been delayed or cancelled, while multi-billion-dollar funding commitments have been pledged toward projects in the United States.
A senior figure publicly accepted that the NHS had to invest a greater share on treatments, noting that its budget allocation on drugs had decreased as a share of its resources over the last ten years.
