Britain and America have hammered out a landmark trade agreement that will ensure zero levies on UK pharmaceutical products entering the American market.
Agreement Details of the Pact
Under the terms of the agreement, the UK has pledged to increase expenditure on drugs through the NHS. This pledge ensures that tariffs on these key goods will be held at nothing for a period of the next three years.
This agreement is in response to previous warnings to hike import taxes on patented drug imports, with figures discussed as high as 100%.
"This arrangement with the UK strengthens the worldwide climate for new treatments and brings much-needed balance to American-British medicine commerce," a release noted.
Economic Impact
Medicines represent one of the UK's largest export categories to the America, which is clearly the primary destination for leading British pharmaceutical firms.
Export figures indicate that in the year prior to the third quarter, the UK shipped medicines totaling over eleven billion pounds to the US. This amount accounted for a significant portion of all goods exports in that timeframe.
"This deal protects jobs, increases capital expenditure and facilitates the UK to become a global hub for life sciences," the Business and Trade Secretary commented.
Specific NHS Changes
The deal entails several key changes from the United Kingdom:
- Price Threshold Increase: The UK will raise the affordability limit at which it deems new medicines to be too expensive by 25%.
- Higher Drug Budget: 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 coming ten years.
- Payback Limit: The amount pharmaceutical firms must pay back to the NHS to control costs will be restricted at fifteen percent. Previously, rebates were more than twenty percent.
Recent Tensions
The pact comes amid a long-running tension between the drug companies and the British authorities over spending levels and regulatory access.
These tensions were heightened by claims that American patients were paying a premium for the equivalent treatments than consumers in the Britain and the EU.
In recent months, several major drug company projects in the UK have been delayed or scrapped, while major funding commitments have been announced toward US facilities.
One official stated that the NHS had to increase expenditure on treatments, noting that its spending on drugs had declined as a share of its overall budget over the last ten years.
