The UK and US have concluded a important commercial pact that will preserve zero tariffs on British medicine exports going into the US market.
The Terms of the Deal
Under the terms of the agreement, the UK has pledged to raise funding on medicines through the NHS. This move secures that tariffs on these key exports will be held at nothing for a period of the next three years.
This deal is in response to earlier threats to significantly raise import taxes on patented pharmaceutical products, with increases floated up to 100%.
"This agreement with the United Kingdom strengthens the international landscape for innovative medicines and establishes long-overdue fairness to American-British drug exports," a statement said.
Economic Significance
Pharmaceuticals are one of the UK's largest goods shipped to the United States, which is clearly the largest destination for major companies like GSK and AstraZeneca.
Trade data reveal that in the year leading up to last September, the UK exported medicines totaling billions to the US. This amount made up 17.4% of British export trade in that timeframe.
"This deal secures employment, boosts investment and facilitates the UK to establish itself as a worldwide center for life sciences," the Business and Trade Secretary commented.
Key British Pledges
The pact entails several notable pledges from the UK:
- Higher Cost Ceiling: The UK will raise the cost ceiling at which it judges new treatments to be prohibitively costly by a quarter.
- Boosted Medicine Funding: There is a target to double total health service expenditure on drugs from 0.3% of the national economy to 0.6 percent over the following ten-year period.
- Rebate Cap: The amount drug companies must return to the NHS to stay within budget will be capped at fifteen percent. Previously, rebates exceeded twenty percent.
Recent Tensions
This agreement comes amid a long-running tension between the pharmaceutical industry and the British authorities over medicine costs and NHS adoption.
The disagreement were heightened by arguments that American consumers were paying significantly more for the same drugs than people in the Britain and the EU.
In recent months, several major drug company projects in the UK have been delayed or scrapped, while multi-billion-dollar investments have been pledged toward American operations.
One official 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 last ten years.
