Britain and America have hammered out a major trade agreement that will maintain zero tariffs on British pharmaceutical products entering the US market.
The Terms of the Pact
As part of the deal, the UK has agreed to increase funding on medicines through the National Health Service (NHS). This pledge secures that duties on these crucial goods will stay at zero for a period of 36 months.
This deal is in response to earlier threats to significantly raise duties on patented pharmaceutical imports, with increases mentioned as high as 100%.
"This deal between the United Kingdom reinforces the international landscape for cutting-edge drugs and establishes much-needed equity to U.S.–U.K. medicine commerce," a statement said.
Economic Importance
Drugs constitute one of the Britain's biggest goods shipped to the America, which is clearly the primary buyer for large UK drugmakers.
Statistics show that in the 12 months to the end of last September, the UK shipped drugs totaling billions to the US. This amount represented nearly one-fifth of British export trade in that span.
"This agreement protects jobs, stimulates funding and sets the stage for the UK to become a international leader for medical research," a government official commented.
Specific British Pledges
The agreement involves several specific pledges from the UK:
- Price Threshold Increase: The UK will lift the price threshold at which it considers new treatments to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a goal to increase overall NHS spending on medicines from 0.3% of GDP to 0.6 percent over the next decade.
- Refund Ceiling: The percentage drug companies must return to the NHS to stay within budget will be capped at fifteen percent. In the past, rebates exceeded 20%.
Industry Background
The pact follows a ongoing dispute between the drug companies and the UK government over spending levels and regulatory access.
This friction were exacerbated by claims that US patients were charged a premium for the same drugs than people in the Britain and the EU.
Over the last 18 months, several large pharmaceutical investments in the UK have been delayed or scrapped, while major funding commitments have been pledged toward projects in the United States.
One official publicly accepted that the NHS needed to spend more on drugs, noting that its spending on drugs had declined as a share of its resources over the previous ten-year period.
