The UK and US have reached a landmark bilateral deal that will ensure zero levies on UK medicine shipments being sold in the US market.
Agreement Details of the Deal
As part of the deal, the UK has pledged to boost expenditure on pharmaceuticals through the NHS. This move secures that import taxes on these crucial products will stay at nothing for a timeframe of three years.
This development is in response to earlier warnings to significantly raise tariffs on patented drug imports, with potential rates mentioned up to 100%.
"This arrangement with the United Kingdom bolsters the international landscape for new treatments and establishes much-needed balance to U.S.–U.K. medicine commerce," an announcement said.
Trade Significance
Medicines represent one of the Britain's biggest goods shipped to the US, which is clearly the primary destination for major UK drugmakers.
Export figures show that in the year leading up to last September, the UK exported drugs worth £11.1bn to the US. This amount represented 17.4% of all goods exports in that span.
"This agreement protects work, stimulates capital expenditure and paves the way for the UK to emerge as a global hub for life sciences," the Business and Trade Secretary stated.
Detailed NHS Changes
The agreement entails several notable changes from the United Kingdom:
- Higher Cost Ceiling: The UK will raise the affordability limit at which it judges new therapies to be too expensive by 25%.
- Higher Drug Budget: There is a goal to increase total NHS spending on treatments from 0.3% of Gross Domestic Product to 0.6% over the next decade.
- Payback Limit: The percentage drug companies must return to the NHS to prevent overspending will be limited at fifteen percent. In the past, repayments were more than twenty percent.
Industry Background
The deal follows a ongoing tension between the sector and the ministers over medicine costs and regulatory access.
The disagreement were exacerbated by claims that US consumers were paying a premium for the same drugs than people in the UK and Europe.
Recently, several major pharmaceutical investments in the UK have been halted or abandoned, while major investments have been directed toward projects in the United States.
The Science Minister stated that the NHS must spend more on medicines, noting that its spending on drugs had declined as a proportion of its resources over the last ten years.
