Britain and America have reached a significant bilateral deal that will preserve zero levies on British drug exports being sold in the American market.
Key Provisions of the Accord
As part of the deal, the UK has agreed to boost spending on pharmaceuticals through the National Health Service (NHS). This move guarantees that duties on these crucial products will be held at zero for a period of 36 months.
This development follows previous warnings to significantly raise import taxes on patented drug imports, with figures mentioned up to 100%.
"This arrangement with the Britain reinforces the international landscape for new treatments and establishes long-overdue fairness to American-British pharmaceutical trade," a release said.
Economic Impact
Medicines represent one of the Britain's largest exports to the US, which is clearly the primary destination for major companies like GSK and AstraZeneca.
Trade data indicate that in the one-year period prior to September, the UK exported pharmaceutical products totaling £11.1bn to the US. This amount accounted for a significant portion of British export trade in that span.
"This agreement protects employment, stimulates capital expenditure and facilitates the UK to emerge as a international leader for life sciences," the Business and Trade Secretary commented.
Detailed NHS Changes
The deal includes several key changes from the British government:
- Revised Affordability Limit: The UK will raise the price threshold at which it considers new medicines to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a target to raise total NHS spending on drugs from 0.3 percent of the national economy to 0.6 percent over the next decade.
- Refund Ceiling: The percentage manufacturers must return to the NHS to stay within budget will be restricted at 15%. In the past, rebates topped 20%.
Industry Background
The pact comes amid a protracted tension between the pharmaceutical industry and the UK government over medicine costs and NHS adoption.
This friction were exacerbated by arguments that US consumers were charged a premium for the equivalent treatments than consumers in the UK and Europe.
Over the last 18 months, several large pharmaceutical investments in the UK have been delayed or scrapped, while major expansions have been announced toward US facilities.
One official stated that the NHS had to spend more on treatments, noting that its spending on drugs had shrunk as a percentage of its resources over the previous ten-year period.
