Britain and America have forged a key trade agreement that will guarantee no duties on UK medicine products going into the American market.
Key Provisions of the Accord
In exchange for the tariff guarantee, the UK has committed to increase funding on medicines through the public health system. This pledge guarantees that tariffs on these vital products will stay at zero for a period of three years.
This agreement comes after earlier threats to significantly raise tariffs on branded drug imports, with increases mentioned as high as double the cost.
"This agreement between the United Kingdom strengthens the international landscape for new treatments and introduces much-needed fairness to U.S.–U.K. drug exports," an announcement declared.
Trade Significance
Drugs represent one of the UK's largest exports to the America, which is clearly the biggest market for leading UK drugmakers.
Trade data show that in the 12 months to the end of last September, the UK shipped pharmaceutical products worth billions to the US. This figure made up 17.4% of total UK exports in that span.
"This agreement protects jobs, boosts investment and facilitates the UK to become a worldwide center for biotech and pharma," the Business and Trade Secretary remarked.
Key NHS Changes
The pact involves several specific commitments from the UK:
- Revised Affordability Limit: The UK will raise the cost ceiling at which it considers new treatments to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a aim to raise total public funding on drugs from 0.3% of GDP to 0.6 percent over the next decade.
- Rebate Cap: The amount drug companies must return to the NHS to control costs will be restricted at 15%. Previously, refunds exceeded 20%.
Recent Tensions
The deal takes place against a protracted row between the drug companies and the British authorities over medicine costs and regulatory access.
These tensions were exacerbated by arguments that American consumers were paying several times more for the equivalent treatments than patients in the UK and Europe.
Over the last 18 months, several large manufacturing plans in the UK have been delayed or abandoned, while multi-billion-dollar funding commitments have been announced toward projects in the United States.
The Science Minister acknowledged that the NHS must invest a greater share on medicines, noting that its expenditure on drugs had declined as a proportion of its resources over the previous ten-year period.
