Britain and America have concluded a significant commercial pact that will maintain no import taxes on British pharmaceutical products going into the US market.
Agreement Details of the Accord
In exchange for the tariff guarantee, the UK has committed to raise spending on drugs through the National Health Service (NHS). This commitment secures that duties on these vital goods will stay at nothing for a period of three years.
This agreement comes after earlier statements to dramatically increase import taxes on patented pharmaceutical imports, with figures discussed up to double the cost.
"This agreement between the United Kingdom strengthens the international landscape for new treatments and establishes much-needed balance to U.S.–U.K. medicine commerce," an announcement noted.
Economic Significance
Medicines constitute one of the Britain's most significant export categories to the America, which is by far the largest destination for leading companies like GSK and AstraZeneca.
Statistics show that in the 12 months to the end of September, the UK exported medicines worth £11.1bn to the US. This amount accounted for nearly one-fifth of British export trade in that timeframe.
"This agreement safeguards employment, stimulates funding and sets the stage for the UK to become a international leader for medical research," the Business and Trade Secretary stated.
Specific NHS Changes
The pact involves several specific commitments from the British government:
- Revised Affordability Limit: The UK will lift the cost ceiling at which it considers new medicines to be unaffordable by a quarter.
- Boosted Medicine Funding: There is a target to increase total NHS spending on treatments from 0.3 percent of GDP to 0.6% over the coming ten years.
- Payback Limit: The amount drug companies must return to the NHS to control costs will be capped at 15%. Last year, rebates exceeded 20%.
Recent Tensions
The pact follows a protracted row between the drug companies and the ministers over spending levels and approval rates.
This friction were heightened by arguments that US customers were paying several times more for the equivalent treatments than patients in the Britain and the EU.
Over the last 18 months, several significant pharmaceutical investments in the UK have been halted or cancelled, while substantial investments have been pledged toward American operations.
A senior figure acknowledged that the NHS must increase expenditure on drugs, noting that its spending on drugs had shrunk as a percentage of its total funding over the past decade.
