The UK and US have agreed to a important trade agreement that will maintain no tariffs on UK medicine products being sold in the US market.
The Terms of the Pact
Under the terms of the agreement, the UK has committed to raise funding on pharmaceuticals through the NHS. This move ensures that tariffs on these key exports will remain at zero for a duration of the next three years.
This agreement is in response to recent threats to significantly raise tariffs on branded pharmaceutical products, with increases discussed as high as 100%.
"This arrangement between the Britain reinforces the global environment for new treatments and brings long-overdue balance to American-British medicine commerce," an announcement said.
Trade Impact
Medicines represent one of the UK's largest export categories to the America, which is clearly the largest destination for leading UK drugmakers.
Export figures indicate that in the year leading up to the third quarter, the UK sold medicines valued at £11.1bn to the US. This value represented nearly one-fifth of total UK exports in that timeframe.
"This guarantee secures jobs, stimulates funding and facilitates the UK to establish itself as a international leader for life sciences," a minister commented.
Specific British Pledges
The pact entails several specific changes from the British government:
- Revised Affordability Limit: The UK will increase the cost ceiling at which it considers new treatments to be unaffordable by twenty-five percent.
- Higher Drug Budget: There is a target to increase overall public funding on treatments from 0.3 percent of the national economy to 0.6 percent over the next decade.
- Payback Limit: The sum pharmaceutical firms must pay back to the NHS to stay within budget will be limited at fifteen percent. In the past, refunds were more than 20%.
Broader Context
This agreement follows a protracted row between the pharmaceutical industry and the UK government over spending levels and approval rates.
This friction were exacerbated by claims that US patients were paying significantly more for the same drugs than consumers in the other developed nations.
Recently, several significant pharmaceutical investments in the UK have been delayed or cancelled, while major expansions have been directed toward projects in the United States.
The Science Minister acknowledged that the NHS needed to increase expenditure on treatments, noting that its expenditure on drugs had decreased as a proportion of its resources over the last ten years.
