Britain and America have agreed to a landmark bilateral deal that will maintain no levies on British medicine products going into the US market.
Agreement Details of the Deal
As part of the deal, the UK has pledged to raise funding on pharmaceuticals through the public health system. This pledge secures that import taxes on these vital products will stay at zero for a duration of three years.
This agreement comes after previous statements to significantly raise duties on branded drug products, with figures mentioned as high as 100%.
"This deal between the United Kingdom bolsters the worldwide climate for innovative medicines and establishes long-overdue balance to U.S.–U.K. medicine commerce," an announcement declared.
Trade Impact
Medicines represent one of the UK's largest goods shipped to the United States, which is clearly the primary buyer for leading companies like GSK and AstraZeneca.
Statistics reveal that in the one-year period prior to September, the UK shipped drugs totaling £11.1bn to the US. This amount accounted for a significant portion of all goods exports in that span.
"This deal secures employment, boosts investment and sets the stage for the UK to emerge as a international leader for life sciences," the Business and Trade Secretary stated.
Key UK Commitments
The deal involves several key commitments from the UK:
- Price Threshold Increase: The UK will raise the cost ceiling at which it considers new medicines to be unaffordable by twenty-five percent.
- Boosted Medicine Funding: There is a target to raise overall NHS spending on medicines from 0.3% of GDP to 0.6% over the coming ten years.
- Rebate Cap: The percentage manufacturers must refund to the NHS to prevent overspending will be capped at 15%. Previously, refunds were more than twenty percent.
Industry Background
This agreement takes place against a long-running row between the drug companies and the UK government over drug pricing and regulatory access.
These tensions were intensified by claims that American customers were paying a premium for the same drugs than people in the other developed nations.
Over the last 18 months, several large drug company projects in the UK have been delayed or scrapped, while multi-billion-dollar investments have been directed toward projects in the United States.
The Science Minister publicly accepted that the NHS needed to invest a greater share on treatments, noting that its budget allocation on drugs had shrunk as a proportion of its total funding over the last ten years.