The United Kingdom and the United States have agreed to a significant trade agreement that will preserve no duties on British drug products being sold in the US market.
The Terms of the Deal
Under the terms of the agreement, the UK has agreed to boost funding on drugs through the National Health Service (NHS). This move guarantees that duties on these key products will be held at zero for a period of the next three years.
This deal comes after recent statements to significantly raise duties on branded drug imports, with increases mentioned as high as 100%.
"This deal with the United Kingdom bolsters the international landscape for new treatments and brings long-overdue fairness to transatlantic pharmaceutical trade," a statement noted.
Trade Impact
Medicines constitute one of the UK's most significant goods shipped to the United States, which is easily the primary buyer for major UK drugmakers.
Trade data show that in the year prior to September, the UK exported drugs totaling billions to the US. This amount represented 17.4% of British export trade in that timeframe.
"This deal protects work, stimulates funding and facilitates the UK to establish itself as a global hub for biotech and pharma," a minister commented.
Specific British Pledges
The agreement involves several notable changes from the UK:
- Higher Cost Ceiling: The UK will lift the cost ceiling at which it considers new treatments to be too expensive by twenty-five percent.
- Boosted Medicine Funding: There is a goal to raise total NHS spending on drugs from 0.3 percent of GDP to 0.6 percent over the coming ten years.
- Rebate Cap: The percentage drug companies must refund to the NHS to stay within budget will be capped at 15%. In the past, rebates topped twenty percent.
Industry Background
This agreement comes amid a long-running tension between the pharmaceutical industry and the ministers over drug pricing and regulatory access.
The disagreement were exacerbated by arguments that American customers were charged several times more for the equivalent treatments than people in the UK and Europe.
Recently, several significant pharmaceutical investments in the UK have been delayed or cancelled, while substantial investments have been directed toward US facilities.
The Science Minister acknowledged that the NHS had to increase expenditure on treatments, noting that its budget allocation on drugs had decreased as a percentage of its overall budget over the past decade.
