The United Kingdom and the United States have announced a landmark trade agreement that will guarantee no duties on UK drug exports being sold in the American market.
Key Provisions of the Deal
As part of the deal, the UK has pledged to boost spending on pharmaceuticals through the NHS. This pledge ensures that import taxes on these key products will be held at nothing for a timeframe of 36 months.
This agreement follows earlier statements to significantly raise duties on patented drug imports, with increases floated up to one hundred percent.
"This agreement with the United Kingdom strengthens the global environment for cutting-edge drugs and introduces long-overdue fairness to transatlantic pharmaceutical trade," a statement declared.
Commercial Significance
Drugs represent one of the UK's largest exports to the US, which is easily the largest destination for leading UK drugmakers.
Statistics reveal that in the year leading up to last September, the UK exported pharmaceutical products totaling £11.1bn to the US. This figure accounted for 17.4% of all goods exports in that period.
"This deal secures employment, boosts capital expenditure and sets the stage for the UK to emerge as a global hub for medical research," a minister stated.
Specific NHS Changes
The agreement entails several key pledges from the British government:
- Revised Affordability Limit: The UK will increase the price threshold at which it judges new treatments to be unaffordable by 25%.
- Boosted Medicine Funding: There is a target to raise total public funding on treatments from 0.3 percent of Gross Domestic Product to 0.6% over the following ten-year period.
- Refund Ceiling: The amount drug companies must refund to the NHS to control costs will be capped at 15%. Last year, rebates were more than 20%.
Industry Background
This agreement follows a ongoing dispute between the drug companies and the British authorities over spending levels and approval rates.
The disagreement were heightened by claims that American patients were charged significantly more for the same drugs than people in the Britain and the EU.
Recently, several major drug company projects in the UK have been halted or abandoned, while major investments have been directed toward US facilities.
A senior figure acknowledged that the NHS had to increase expenditure on drugs, noting that its budget allocation on drugs had declined as a percentage of its resources over the last ten years.
