The United Kingdom and the United States have secured a landmark bilateral deal that will guarantee no tariffs on UK pharmaceutical shipments being sold in the American market.
The Terms of the Pact
Under the terms of the agreement, the UK has pledged to increase funding on drugs through the National Health Service (NHS). This move ensures that tariffs on these vital exports will stay at nothing for a duration of three years.
This agreement comes after previous threats to dramatically increase tariffs on patented drug products, with potential rates floated reaching 100%.
"This agreement with the United Kingdom reinforces the international landscape for cutting-edge drugs and introduces much-needed equity to transatlantic drug exports," a release said.
Trade Impact
Drugs represent one of the the United Kingdom's biggest exports to the US, which is easily the largest market for leading companies like GSK and AstraZeneca.
Export figures indicate that in the one-year period prior to last September, the UK shipped pharmaceutical products worth £11.1bn to the US. This figure accounted for nearly one-fifth of British export trade in that timeframe.
"This deal safeguards jobs, boosts investment and facilitates the UK to establish itself as a worldwide center for medical research," a government official commented.
Specific NHS Changes
The pact involves several key pledges from the UK:
- Higher Cost Ceiling: The UK will increase the price threshold at which it deems new treatments to be too expensive by twenty-five percent.
- Increased NHS Spending: There is a goal to double overall public funding on medicines from 0.3% of Gross Domestic Product to 0.6 percent over the next decade.
- Rebate Cap: The percentage manufacturers must return to the NHS to prevent overspending will be capped at 15%. Last year, refunds topped 20%.
Recent Tensions
The pact follows a ongoing tension between the pharmaceutical industry and the British authorities over drug pricing and approval rates.
These tensions were intensified by assertions that US consumers were paying significantly more for the identical medicines than consumers in the UK and Europe.
Over the last 18 months, several significant manufacturing plans in the UK have been halted or cancelled, while multi-billion-dollar expansions have been directed toward American operations.
The Science Minister stated that the NHS must invest a greater share on drugs, noting that its spending on drugs had decreased as a proportion of its total funding over the last ten years.
