The UK and US have agreed to a key bilateral deal that will preserve zero levies on UK drug exports going into the American market.
Key Provisions of the Deal
Under the terms of the agreement, the UK has pledged to boost funding on pharmaceuticals through the NHS. This move secures that duties on these vital goods will stay at zero for a duration of 36 months.
This agreement follows recent statements to hike duties on patented drug imports, with potential rates floated as high as one hundred percent.
"This deal with the Britain reinforces the worldwide climate for new treatments and brings long-overdue equity to American-British medicine commerce," a release said.
Economic Impact
Pharmaceuticals represent one of the UK's most significant exports to the United States, which is clearly the largest destination for large UK drugmakers.
Statistics show that in the 12 months to the end of the third quarter, the UK exported pharmaceutical products totaling billions to the US. This amount represented a significant portion of all goods exports in that span.
"This agreement protects jobs, increases funding and sets the stage for the UK to establish itself as a worldwide center for biotech and pharma," the Business and Trade Secretary stated.
Specific UK Commitments
The deal entails several specific changes from the British government:
- Revised Affordability Limit: The UK will raise the price threshold at which it considers new medicines to be prohibitively costly by 25%.
- Higher Drug Budget: There is a goal to double overall health service expenditure on treatments from 0.3 percent of GDP to 0.6 percent over the coming ten years.
- Refund Ceiling: The percentage manufacturers must return to the NHS to prevent overspending will be restricted at 15%. In the past, repayments topped 20%.
Broader Context
The deal follows a protracted row between the pharmaceutical industry and the ministers over medicine costs and regulatory access.
These tensions were exacerbated by arguments that US customers were paying significantly more for the same drugs than people in the UK and Europe.
Over the last 18 months, several significant pharmaceutical investments in the UK have been halted or abandoned, while major investments have been pledged toward US facilities.
The Science Minister stated that the NHS needed to increase expenditure on treatments, noting that its spending on drugs had shrunk as a proportion of its resources over the previous ten-year period.
