The UK and US have agreed to a key trade agreement that will keep no tariffs on British medicine shipments going into the US market.
Key Provisions of the Accord
Under the terms of the agreement, the UK has agreed to raise expenditure on drugs through the public health system. This pledge ensures that tariffs on these vital goods will stay at zero for a duration of 36 months.
This development follows previous warnings to dramatically increase tariffs on patented drug imports, with increases floated reaching one hundred percent.
"This agreement between the UK reinforces the worldwide climate for innovative medicines and establishes long-overdue balance to American-British medicine commerce," a statement said.
Economic Impact
Drugs represent one of the the United Kingdom's biggest export categories to the United States, which is clearly the biggest buyer for large British pharmaceutical firms.
Statistics show that in the 12 months leading up to September, the UK sold drugs worth billions to the US. This value made up 17.4% of all goods exports in that timeframe.
"This agreement secures jobs, boosts investment and sets the stage for the UK to emerge as a worldwide center for biotech and pharma," the Business and Trade Secretary remarked.
Key UK Commitments
The pact involves several specific changes from the United Kingdom:
- Higher Cost Ceiling: The UK will raise the cost ceiling at which it considers new therapies to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a target to double total health service expenditure on treatments from 0.3% of Gross Domestic Product to 0.6% over the coming ten years.
- Rebate Cap: The percentage drug companies must return to the NHS to stay within budget will be capped at 15%. In the past, repayments exceeded 20%.
Industry Background
The deal follows a long-running row between the sector and the ministers over drug pricing and approval rates.
This friction were exacerbated by claims that US customers were charged several times more for the equivalent treatments than consumers in the UK and Europe.
Over the last 18 months, several large pharmaceutical investments in the UK have been paused or cancelled, while major expansions have been announced toward US facilities.
The Science Minister publicly accepted that the NHS had to increase expenditure on medicines, noting that its budget allocation on drugs had declined as a share of its total funding over the last ten years.
