The United Kingdom and the United States have secured a significant bilateral deal that will preserve zero tariffs on British medicine products going into the US market.
The Terms of the Deal
Under the terms of the agreement, the UK has pledged to increase expenditure on pharmaceuticals through the National Health Service (NHS). This commitment secures that tariffs on these key products will remain at zero for a duration of 36 months.
This agreement follows earlier threats to significantly raise duties on branded pharmaceutical products, with figures mentioned up to double the cost.
"This arrangement with the UK bolsters the international landscape for innovative medicines and establishes long-overdue balance to U.S.–U.K. pharmaceutical trade," a release said.
Economic Importance
Drugs are one of the UK's biggest export categories to the US, which is easily the largest market for large UK drugmakers.
Export figures show that in the year prior to last September, the UK shipped pharmaceutical products worth £11.1bn to the US. This amount represented nearly one-fifth of all goods exports in that timeframe.
"This guarantee safeguards jobs, boosts capital expenditure and sets the stage for the UK to establish itself as a global hub for life sciences," the Business and Trade Secretary commented.
Specific British Pledges
The agreement involves several notable pledges from the UK:
- Price Threshold Increase: The UK will increase the cost ceiling at which it judges new treatments to be too expensive by 25%.
- Boosted Medicine Funding: There is a target to double total NHS spending on treatments from 0.3 percent of Gross Domestic Product to 0.6% over the following ten-year period.
- Rebate Cap: The amount pharmaceutical firms must pay back to the NHS to stay within budget will be restricted at 15%. Previously, rebates exceeded 20%.
Industry Background
This agreement comes amid a ongoing row between the pharmaceutical industry and the ministers over spending levels and approval rates.
These tensions were intensified by arguments that US consumers were charged several times more for the equivalent treatments than people in the UK and Europe.
Recently, several significant drug company projects in the UK have been paused or abandoned, while substantial expansions have been directed toward American operations.
One official publicly accepted that the NHS had to spend more on treatments, noting that its budget allocation on drugs had declined as a proportion of its total funding over the last ten years.
