The United Kingdom and the United States have hammered out a key trade agreement that will keep no import taxes on British pharmaceutical products being sold in the American market.
The Terms of the Deal
In exchange for the tariff guarantee, the UK has pledged to increase expenditure on pharmaceuticals through the National Health Service (NHS). This pledge secures that tariffs on these crucial products will be held at nothing for a timeframe of 36 months.
This agreement follows recent threats to hike tariffs on patented pharmaceutical products, with increases floated as high as 100%.
"This agreement between the UK bolsters the international landscape for cutting-edge drugs and brings much-needed balance to U.S.–U.K. pharmaceutical trade," a release declared.
Economic Significance
Drugs represent one of the the United Kingdom's biggest export categories to the US, which is by far the biggest market for major UK drugmakers.
Export figures indicate that in the one-year period to the end of the third quarter, the UK shipped medicines worth £11.1bn to the US. This figure made up a significant portion of all goods exports in that period.
"This guarantee secures work, stimulates capital expenditure and paves the way for the UK to become a global hub for biotech and pharma," the Business and Trade Secretary commented.
Key UK Commitments
The pact includes several notable pledges from the British government:
- Revised Affordability Limit: The UK will lift the cost ceiling at which it deems new therapies to be too expensive by twenty-five percent.
- Boosted Medicine Funding: There is a target to double overall health service expenditure on medicines from 0.3% of GDP to 0.6 percent over the coming ten years.
- Refund Ceiling: The sum manufacturers must pay back to the NHS to stay within budget will be restricted at 15%. In the past, rebates were more than 20%.
Industry Background
This agreement follows a ongoing dispute between the sector and the UK government over spending levels and NHS adoption.
This friction were heightened by arguments that American customers were paying several times more for the same drugs than consumers in the UK and Europe.
Recently, several significant manufacturing plans in the UK have been halted or cancelled, while substantial expansions have been announced toward American operations.
One official stated that the NHS had to invest a greater share on drugs, noting that its spending on drugs had shrunk as a share of its resources over the last ten years.
