America and Britain Strike Zero-Tariff Arrangement on Prescription Drugs.
The UK and US have hammered out a important bilateral deal that will keep no import taxes on UK pharmaceutical shipments being sold in the American market.
The Terms of the Accord
As part of the deal, the UK has committed to increase funding on drugs through the public health system. This move ensures that import taxes on these vital goods will be held at zero for a period of three years.
This deal comes after previous threats to hike duties on branded drug products, with potential rates mentioned reaching double the cost.
"This deal with the UK strengthens the international landscape for innovative medicines and introduces long-overdue equity to U.S.–U.K. medicine commerce," a release said.
Trade Impact
Drugs represent one of the UK's largest export categories to the US, which is clearly the biggest destination for major companies like GSK and AstraZeneca.
Export figures show that in the year prior to last September, the UK exported medicines totaling over eleven billion pounds to the US. This figure accounted for 17.4% of total UK exports in that period.
"This agreement secures work, increases investment and paves the way for the UK to become a global hub for medical research," the Business and Trade Secretary remarked.
Key UK Commitments
The deal includes several key pledges from the British government:
- Higher Cost Ceiling: The UK will raise the cost ceiling at which it considers new therapies to be unaffordable by twenty-five percent.
- Higher Drug Budget: There is a aim to increase total health service expenditure on drugs from 0.3 percent of GDP to 0.6% over the coming ten years.
- Payback Limit: The amount manufacturers must pay back to the NHS to stay within budget will be limited at 15%. Last year, rebates topped twenty percent.
Industry Background
The deal takes place against a ongoing row between the sector and the ministers over spending levels and NHS adoption.
This friction were exacerbated by claims that US consumers were charged a premium for the same drugs than people in the other developed nations.
In recent months, several significant manufacturing plans in the UK have been halted or abandoned, while major investments have been directed toward projects in the United States.
The Science Minister acknowledged that the NHS must increase expenditure on treatments, noting that its spending on drugs had decreased as a proportion of its resources over the last ten years.