Britain and America have agreed to a key commercial pact that will keep no import taxes on UK drug exports going into the US market.
The Terms of the Pact
In exchange for the tariff guarantee, the UK has committed to increase expenditure on drugs through the NHS. This commitment secures that duties on these vital products will remain at zero for a duration of three years.
This development follows previous statements to dramatically increase import taxes on patented drug products, with figures mentioned reaching double the cost.
"This deal between the UK strengthens the global environment for new treatments and brings long-overdue balance to U.S.–U.K. pharmaceutical trade," an announcement declared.
Economic Significance
Medicines constitute one of the the United Kingdom's largest export categories to the US, which is by far the biggest market for leading British pharmaceutical firms.
Export figures show that in the 12 months leading up to September, the UK exported medicines worth billions to the US. This value made up 17.4% of British export trade in that timeframe.
"This deal safeguards employment, increases capital expenditure and paves the way for the UK to become a international leader for life sciences," the Business and Trade Secretary remarked.
Key British Pledges
The pact includes several key changes from the United Kingdom:
- Revised Affordability Limit: The UK will raise the affordability limit at which it deems new treatments to be too expensive by a quarter.
- Higher Drug Budget: There is a aim to double total health service expenditure on drugs from 0.3 percent of the national economy to 0.6 percent over the coming ten years.
- Refund Ceiling: The percentage manufacturers must refund to the NHS to prevent overspending will be limited at 15%. In the past, repayments topped 20%.
Broader Context
This agreement follows a ongoing tension between the drug companies and the ministers over medicine costs and NHS adoption.
These tensions were exacerbated by claims that US consumers were paying a premium for the identical medicines than patients in the UK and Europe.
Recently, several large pharmaceutical investments in the UK have been delayed or abandoned, while major investments have been directed toward American operations.
The Science Minister stated that the NHS had to spend more on medicines, noting that its spending on drugs had shrunk as a proportion of its overall budget over the last ten years.
