The UK and US have agreed to a key commercial pact that will guarantee zero tariffs on British medicine exports entering the US market.
The Terms of the Accord
Under the terms of the agreement, the UK has pledged to raise funding on drugs through the National Health Service (NHS). This pledge guarantees that tariffs on these vital exports will stay at zero for a period of three years.
This deal comes after previous threats to significantly raise duties on branded pharmaceutical imports, with increases floated as high as 100%.
"This agreement between the Britain bolsters the international landscape for innovative medicines and brings much-needed equity to American-British medicine commerce," a statement said.
Economic Significance
Pharmaceuticals represent one of the Britain's largest exports to the US, which is by far the primary buyer for large companies like GSK and AstraZeneca.
Export figures indicate that in the one-year period to the end of the third quarter, the UK exported drugs totaling over eleven billion pounds to the US. This figure represented 17.4% of British export trade in that span.
"This deal secures work, stimulates investment and facilitates the UK to emerge as a international leader for biotech and pharma," a government official stated.
Specific UK Commitments
The deal includes several specific pledges from the United Kingdom:
- Price Threshold Increase: The UK will increase the cost ceiling at which it judges new treatments to be too expensive by a quarter.
- Higher Drug Budget: There is a aim to raise overall public funding on treatments from 0.3 percent of GDP to 0.6% over the coming ten years.
- Rebate Cap: The amount manufacturers must return to the NHS to control costs will be capped at fifteen percent. Previously, refunds exceeded twenty percent.
Broader Context
This agreement comes amid a long-running row between the drug companies and the British authorities over drug pricing and regulatory access.
These tensions were intensified by claims that American consumers were charged a premium for the same drugs than people in the UK and Europe.
Recently, several large pharmaceutical investments in the UK have been delayed or abandoned, while substantial funding commitments have been announced toward projects in the United States.
A senior figure acknowledged that the NHS must spend more on drugs, noting that its budget allocation on drugs had declined as a share of its overall budget over the previous ten-year period.
