Britain and America have hammered out a significant commercial pact that will preserve no import taxes on British pharmaceutical shipments being sold in the American market.
Key Provisions of the Accord
Under the terms of the agreement, the UK has agreed to increase funding on medicines through the NHS. This move guarantees that import taxes on these key products will remain at nothing for a period of three years.
This deal comes after recent threats to significantly raise tariffs on branded drug products, with increases discussed up to 100%.
"This deal with the UK bolsters the global environment for new treatments and brings long-overdue fairness to American-British pharmaceutical trade," an announcement noted.
Trade Importance
Drugs are one of the UK's largest goods shipped to the US, which is easily the largest market for leading UK drugmakers.
Trade data reveal that in the year to the end of the third quarter, the UK exported medicines valued at £11.1bn to the US. This amount represented 17.4% of British export trade in that timeframe.
"This guarantee safeguards employment, stimulates investment and facilitates the UK to become a worldwide center for medical research," the Business and Trade Secretary stated.
Specific NHS Changes
The pact includes several specific changes from the British government:
- Revised Affordability Limit: The UK will lift the affordability limit at which it deems new treatments to be unaffordable by a quarter.
- Higher Drug Budget: There is a target to increase total public funding on treatments from 0.3 percent of the national economy to 0.6% over the coming ten years.
- Refund Ceiling: The sum drug companies must refund to the NHS to prevent overspending will be capped at fifteen percent. In the past, rebates exceeded 20%.
Industry Background
This agreement follows a long-running dispute between the pharmaceutical industry and the British authorities over drug pricing and regulatory access.
These tensions were exacerbated by arguments that American consumers were paying several times more for the identical medicines than consumers in the Britain and the EU.
Over the last 18 months, several significant manufacturing plans in the UK have been delayed or abandoned, while major expansions have been pledged toward projects in the United States.
The Science Minister publicly accepted that the NHS must increase expenditure on treatments, noting that its expenditure on drugs had decreased as a share of its total funding over the past decade.
