The UK and US have secured a important bilateral deal that will preserve no duties on UK pharmaceutical exports entering the US market.
Key Provisions of the Deal
As part of the deal, the UK has pledged to raise expenditure on drugs through the NHS. This pledge ensures that import taxes on these crucial exports will remain at zero for a period of the next three years.
This agreement comes after earlier threats to dramatically increase duties on branded drug imports, with figures discussed as high as double the cost.
"This deal between the UK strengthens the worldwide climate for new treatments and establishes long-overdue equity to American-British pharmaceutical trade," an announcement said.
Trade Significance
Pharmaceuticals are one of the Britain's biggest exports to the US, which is easily the largest buyer for leading companies like GSK and AstraZeneca.
Export figures indicate that in the year leading up to September, the UK shipped drugs valued at £11.1bn to the US. This value made up nearly one-fifth of total UK exports in that period.
"This deal safeguards work, stimulates capital expenditure and sets the stage for the UK to emerge as a international leader for biotech and pharma," the Business and Trade Secretary remarked.
Detailed UK Commitments
The pact includes several specific commitments from the UK:
- Price Threshold Increase: The UK will increase the affordability limit at which it judges new therapies to be unaffordable by a quarter.
- Higher Drug Budget: There is a aim to double overall NHS spending on medicines from 0.3% of the national economy to 0.6% over the coming ten years.
- Rebate Cap: The percentage drug companies must refund to the NHS to prevent overspending will be limited at 15%. In the past, refunds exceeded twenty percent.
Industry Background
This agreement follows a protracted row between the sector and the ministers over medicine costs and regulatory access.
This friction were exacerbated by claims that American customers were paying a premium for the equivalent treatments than people in the other developed nations.
Over the last 18 months, several significant manufacturing plans in the UK have been paused or scrapped, while major expansions have been pledged toward US facilities.
One official acknowledged that the NHS had to increase expenditure on drugs, noting that its expenditure on drugs had declined as a share of its resources over the past decade.
