The United Kingdom and the United States have signed a landmark bilateral deal that will ensure no duties on British medicine exports entering the US market.
The Terms of the Deal
In exchange for the tariff guarantee, the UK has agreed to increase funding on medicines through the NHS. This commitment secures that tariffs on these key exports will stay at nothing for a timeframe of the next three years.
This agreement follows previous warnings to hike duties on patented pharmaceutical products, with increases discussed as high as double the cost.
"This arrangement between the United Kingdom reinforces the global environment for innovative medicines and brings much-needed fairness to transatlantic drug exports," an announcement noted.
Economic Significance
Pharmaceuticals represent one of the Britain's most significant exports to the US, which is by far the primary buyer for large British pharmaceutical firms.
Export figures show that in the year to the end of last September, the UK shipped pharmaceutical products valued at over eleven billion pounds to the US. This figure accounted for a significant portion of British export trade in that timeframe.
"This guarantee secures jobs, increases capital expenditure and paves the way for the UK to become a international leader for medical research," the Business and Trade Secretary remarked.
Detailed UK Commitments
The agreement involves several notable pledges from the UK:
- Price Threshold Increase: The UK will lift the affordability limit at which it judges new treatments to be too expensive by a quarter.
- Increased NHS Spending: There is a aim to raise total health service expenditure on treatments from 0.3% of Gross Domestic Product to 0.6% over the following ten-year period.
- Payback Limit: The sum pharmaceutical firms must return to the NHS to stay within budget will be capped at fifteen percent. Previously, repayments topped 20%.
Industry Background
The pact follows a long-running row between the pharmaceutical industry and the British authorities over spending levels and approval rates.
These tensions were intensified by claims that US patients were paying a premium for the same drugs than people in the other developed nations.
Over the last 18 months, several large pharmaceutical investments in the UK have been halted or scrapped, while multi-billion-dollar funding commitments have been announced toward American operations.
A senior figure publicly accepted that the NHS had to spend more on treatments, noting that its budget allocation on drugs had declined as a share of its total funding over the last ten years.
