The UK and US have agreed to a major bilateral deal that will maintain zero levies on UK drug shipments going into the US market.
Key Provisions of the Pact
As part of the deal, the UK has pledged to increase spending on drugs through the National Health Service (NHS). This pledge ensures that duties on these crucial goods will stay at nothing for a timeframe of the next three years.
This deal follows recent warnings to dramatically increase duties on patented pharmaceutical products, with figures mentioned as high as 100%.
"This agreement between the Britain strengthens the global environment for new treatments and establishes much-needed balance to American-British medicine commerce," an announcement declared.
Commercial Impact
Drugs constitute one of the the United Kingdom's largest export categories to the US, which is clearly the largest market for major British pharmaceutical firms.
Export figures indicate that in the one-year period prior to September, the UK shipped pharmaceutical products worth billions to the US. This figure made up nearly one-fifth of British export trade in that period.
"This deal protects jobs, increases investment and paves the way for the UK to emerge as a international leader for biotech and pharma," a minister remarked.
Detailed NHS Changes
The deal entails several specific pledges from the British government:
- Revised Affordability Limit: The UK will raise the cost ceiling at which it deems new treatments to be unaffordable by a quarter.
- Increased NHS Spending: There is a aim to raise overall public funding on drugs from 0.3% of GDP to 0.6 percent over the following ten-year period.
- Refund Ceiling: The amount drug companies must return to the NHS to stay within budget will be restricted at 15%. Last year, refunds topped 20%.
Industry Background
The deal follows a protracted tension between the sector and the British authorities over drug pricing and NHS adoption.
These tensions were exacerbated by claims that US consumers were charged several times more for the same drugs than consumers in the Britain and the EU.
Over the last 18 months, several major manufacturing plans in the UK have been paused or abandoned, while multi-billion-dollar investments have been pledged toward American operations.
The Science Minister stated that the NHS must spend more on medicines, noting that its spending on drugs had declined as a percentage of its overall budget over the last ten years.
