The United Kingdom and the United States have finalized a key bilateral deal that will guarantee no duties on British pharmaceutical shipments going into the American market.
Agreement Details of the Pact
Under the terms of the agreement, the UK has pledged to boost spending on pharmaceuticals through the public health system. This move guarantees that import taxes on these key exports will be held at zero for a period of 36 months.
This agreement is in response to previous threats to dramatically increase tariffs on patented drug imports, with figures mentioned up to one hundred percent.
"This deal between the UK strengthens the global environment for new treatments and establishes much-needed balance to U.S.–U.K. drug exports," a release said.
Commercial Impact
Pharmaceuticals represent one of the the United Kingdom's largest export categories to the US, which is easily the biggest destination for large UK drugmakers.
Statistics indicate that in the 12 months leading up to last September, the UK shipped medicines valued at £11.1bn to the US. This amount represented nearly one-fifth of total UK exports in that span.
"This deal safeguards employment, increases investment and facilitates the UK to become a global hub for biotech and pharma," a minister stated.
Detailed UK Commitments
The agreement includes several key commitments from the United Kingdom:
- Revised Affordability Limit: The UK will raise the cost ceiling at which it considers new treatments to be prohibitively costly by a quarter.
- Boosted Medicine Funding: There is a target to increase overall public funding on drugs from 0.3 percent of GDP to 0.6% over the following ten-year period.
- Rebate Cap: The amount drug companies must return to the NHS to prevent overspending will be limited at 15%. Last year, rebates exceeded 20%.
Recent Tensions
The pact follows a ongoing tension between the sector and the ministers over spending levels and regulatory access.
These tensions were exacerbated by claims that American customers were charged several times more for the same drugs than consumers in the Britain and the EU.
In recent months, several major pharmaceutical investments in the UK have been delayed or abandoned, while substantial expansions have been pledged toward American operations.
The Science Minister publicly accepted that the NHS must spend more on drugs, noting that its budget allocation on drugs had declined as a percentage of its resources over the last ten years.
