The UK and US have secured a important commercial pact that will guarantee zero levies on British pharmaceutical shipments being sold in the US market.
The Terms of the Accord
In exchange for the tariff guarantee, the UK has agreed to raise expenditure on medicines through the National Health Service (NHS). This pledge ensures that tariffs on these key goods will remain at zero for a period of the next three years.
This development follows previous statements to dramatically increase import taxes on patented pharmaceutical products, with potential rates discussed up to one hundred percent.
"This arrangement between the UK reinforces the global environment for new treatments and establishes long-overdue equity to transatlantic medicine commerce," an announcement declared.
Economic Importance
Medicines are one of the the United Kingdom's largest exports to the US, which is clearly the primary buyer for leading companies like GSK and AstraZeneca.
Export figures show that in the one-year period leading up to last September, the UK shipped medicines valued at £11.1bn to the US. This value accounted for a significant portion of British export trade in that period.
"This guarantee secures employment, increases funding and sets the stage for the UK to establish itself as a international leader for biotech and pharma," a minister commented.
Detailed British Pledges
The agreement entails several notable pledges from the UK:
- Revised Affordability Limit: The UK will lift the cost ceiling at which it deems new medicines to be unaffordable by 25%.
- Increased NHS Spending: There is a aim to increase overall public funding on treatments from 0.3 percent of GDP to 0.6% over the next decade.
- Rebate Cap: The percentage pharmaceutical firms must refund to the NHS to control costs will be limited at 15%. Last year, repayments were more than 20%.
Broader Context
This agreement follows a ongoing dispute between the pharmaceutical industry and the ministers over spending levels and NHS adoption.
This friction were heightened by arguments that American patients were paying a premium for the equivalent treatments than patients in the UK and Europe.
Over the last 18 months, several large manufacturing plans in the UK have been delayed or scrapped, while major funding commitments have been pledged toward US facilities.
One official publicly accepted that the NHS must increase expenditure on medicines, noting that its expenditure on drugs had shrunk as a percentage of its total funding over the past decade.
