Britain and America have signed a key bilateral deal that will keep zero duties on UK drug products entering the American market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has agreed to increase expenditure on drugs through the National Health Service (NHS). This move guarantees that import taxes on these key products will be held at zero for a timeframe of the next three years.
This development is in response to previous statements to hike import taxes on branded pharmaceutical products, with increases mentioned as high as one hundred percent.
"This arrangement with the Britain reinforces the worldwide climate for innovative medicines and brings much-needed equity to U.S.–U.K. drug exports," an announcement noted.
Trade Importance
Drugs constitute one of the the United Kingdom's largest export categories to the US, which is clearly the largest destination for leading UK drugmakers.
Export figures reveal that in the one-year period to the end of last September, the UK shipped drugs valued at billions to the US. This value made up a significant portion of British export trade in that span.
"This guarantee protects employment, stimulates funding and facilitates the UK to establish itself as a international leader for biotech and pharma," the Business and Trade Secretary commented.
Detailed NHS Changes
The pact includes several notable pledges from the British government:
- Higher Cost Ceiling: The UK will lift the affordability limit at which it considers new therapies to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a goal to double overall health service expenditure on drugs from 0.3% of GDP to 0.6 percent over the coming ten years.
- Rebate Cap: The amount pharmaceutical firms must refund to the NHS to stay within budget will be restricted at 15%. Last year, refunds topped twenty percent.
Industry Background
The deal follows a protracted row between the drug companies and the ministers over spending levels and approval rates.
The disagreement were intensified by claims that American customers were charged several times more for the equivalent treatments than consumers in the UK and Europe.
Over the last 18 months, several significant pharmaceutical investments in the UK have been halted or abandoned, while major funding commitments have been announced toward American operations.
One official acknowledged that the NHS had to spend more on treatments, noting that its spending on drugs had declined as a percentage of its resources over the previous ten-year period.
