The UK and US have finalized a landmark commercial pact that will keep zero levies on UK drug products going into the US market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has committed to raise expenditure on drugs through the NHS. This move secures that import taxes on these crucial goods will be held at nothing for a period of 36 months.
This deal follows previous statements to dramatically increase import taxes on patented drug imports, with increases discussed reaching double the cost.
"This arrangement between the UK strengthens the international landscape for new treatments and brings long-overdue balance to American-British medicine commerce," a statement noted.
Trade Significance
Drugs represent one of the UK's biggest export categories to the America, which is by far the largest destination for large UK drugmakers.
Export figures indicate that in the 12 months prior to the third quarter, the UK exported drugs totaling billions to the US. This figure made up nearly one-fifth of British export trade in that period.
"This agreement secures jobs, increases investment and paves the way for the UK to emerge as a global hub for life sciences," the Business and Trade Secretary commented.
Specific NHS Changes
The agreement involves several specific pledges from the United Kingdom:
- Price Threshold Increase: The UK will lift the price threshold at which it considers new therapies to be unaffordable by a quarter.
- Higher Drug Budget: There is a target to raise total public funding on treatments from 0.3 percent of GDP to 0.6% over the coming ten years.
- Rebate Cap: The sum pharmaceutical firms must refund to the NHS to stay within budget will be restricted at 15%. Last year, rebates were more than 20%.
Recent Tensions
The pact comes amid a protracted row between the drug companies and the UK government over drug pricing and regulatory access.
This friction were exacerbated by claims that US customers were charged significantly more for the identical medicines than consumers in the UK and Europe.
Recently, several large manufacturing plans in the UK have been halted or scrapped, while major investments have been directed toward US facilities.
A senior figure acknowledged that the NHS needed to spend more on drugs, noting that its spending on drugs had declined as a share of its overall budget over the last ten years.
