Britain and America have forged a major commercial pact that will ensure no import taxes on British pharmaceutical shipments entering the US market.
Key Provisions of the Accord
Under the terms of the agreement, the UK has committed to increase funding on medicines through the NHS. This commitment secures that duties on these crucial products will stay at zero for a period of 36 months.
This agreement is in response to recent threats to hike duties on patented pharmaceutical imports, with figures discussed reaching 100%.
"This deal with the Britain bolsters the international landscape for innovative medicines and introduces long-overdue fairness to American-British drug exports," a release declared.
Economic Significance
Medicines are one of the the United Kingdom's biggest exports to the United States, which is easily the biggest buyer for large companies like GSK and AstraZeneca.
Export figures show that in the one-year period to the end of last September, the UK shipped pharmaceutical products totaling billions to the US. This value accounted for nearly one-fifth of British export trade in that span.
"This guarantee safeguards jobs, stimulates investment and facilitates the UK to become a global hub for life sciences," a government official remarked.
Specific UK Commitments
The deal entails several specific commitments from the UK:
- Revised Affordability Limit: The UK will raise the affordability limit at which it considers new medicines to be too expensive by a quarter.
- Higher Drug Budget: There is a aim to double total NHS spending on treatments from 0.3 percent of GDP to 0.6% over the next decade.
- Payback Limit: The percentage drug companies must pay back to the NHS to stay within budget will be limited at 15%. Last year, refunds were more than 20%.
Recent Tensions
This agreement follows a long-running tension between the drug companies and the ministers over spending levels and regulatory access.
These tensions were intensified by arguments that US customers were charged significantly more for the identical medicines than patients in the UK and Europe.
Recently, several significant drug company projects in the UK have been delayed or scrapped, while multi-billion-dollar investments have been announced toward American operations.
One official acknowledged that the NHS had to spend more on treatments, noting that its spending on drugs had declined as a share of its overall budget over the past decade.
