Britain and America have announced a landmark trade agreement that will maintain zero levies on UK pharmaceutical shipments going into the American market.
The Terms of the Deal
Under the terms of the agreement, the UK has committed to increase spending on pharmaceuticals through the NHS. This commitment secures that tariffs on these vital goods will stay at nothing for a duration of the next three years.
This deal is in response to earlier threats to hike duties on branded drug products, with figures discussed reaching one hundred percent.
"This agreement with the UK reinforces the international landscape for innovative medicines and brings much-needed equity to American-British pharmaceutical trade," an announcement noted.
Commercial Impact
Drugs are one of the UK's largest export categories to the United States, which is clearly the largest buyer for large companies like GSK and AstraZeneca.
Export figures reveal that in the 12 months to the end of last September, the UK sold pharmaceutical products totaling £11.1bn to the US. This value made up a significant portion of total UK exports in that timeframe.
"This agreement secures jobs, boosts funding and sets the stage for the UK to become a worldwide center for biotech and pharma," a minister stated.
Specific UK Commitments
The agreement entails several notable commitments from the United Kingdom:
- Revised Affordability Limit: The UK will lift the affordability limit at which it considers new treatments to be unaffordable by a quarter.
- Increased NHS Spending: There is a target to double overall NHS spending on medicines from 0.3 percent of the national economy to 0.6% over the next decade.
- Payback Limit: The amount pharmaceutical firms must refund to the NHS to control costs will be limited at fifteen percent. Previously, rebates topped twenty percent.
Recent Tensions
This agreement takes place against a ongoing row between the drug companies and the ministers over drug pricing and NHS adoption.
These tensions were heightened by claims that American customers were charged several times more for the equivalent treatments than consumers in the UK and Europe.
Recently, several major pharmaceutical investments in the UK have been halted or abandoned, while major investments have been directed toward projects in the United States.
The Science Minister stated that the NHS had to invest a greater share on medicines, noting that its spending on drugs had decreased as a percentage of its resources over the past decade.
