The UK and US have forged a significant commercial pact that will guarantee zero tariffs on British medicine shipments going into the American market.
The Terms of the Deal
Under the terms of the agreement, the UK has pledged to boost funding on pharmaceuticals through the NHS. This pledge secures that duties on these vital goods will remain at zero for a period of the next three years.
This agreement is in response to previous threats to hike tariffs on patented pharmaceutical imports, with increases floated up to 100%.
"This arrangement between the UK bolsters the global environment for innovative medicines and establishes long-overdue fairness to U.S.–U.K. medicine commerce," an announcement noted.
Commercial Impact
Pharmaceuticals represent one of the the United Kingdom's largest goods shipped to the United States, which is by far the biggest market for leading UK drugmakers.
Trade data reveal that in the 12 months prior to September, the UK exported pharmaceutical products totaling £11.1bn to the US. This amount represented a significant portion of all goods exports in that period.
"This deal secures work, stimulates investment and facilitates the UK to become a global hub for life sciences," a government official commented.
Specific UK Commitments
The pact entails several notable pledges from the British government:
- Revised Affordability Limit: The UK will raise the cost ceiling at which it deems new therapies to be too expensive by 25%.
- Boosted Medicine Funding: There is a goal to double total health service expenditure on drugs from 0.3 percent of GDP to 0.6 percent over the next decade.
- Rebate Cap: The percentage manufacturers must pay back to the NHS to control costs will be capped at 15%. Last year, repayments were more than 20%.
Recent Tensions
The pact follows a long-running tension between the drug companies and the UK government over spending levels and NHS adoption.
The disagreement were exacerbated by claims that US patients were charged several times more for the equivalent treatments than people in the UK and Europe.
Recently, several significant manufacturing plans in the UK have been delayed or cancelled, while substantial expansions have been announced toward American operations.
A senior figure acknowledged that the NHS needed to spend more on medicines, noting that its spending on drugs had decreased as a proportion of its resources over the past decade.
