Britain and America have signed a important trade agreement that will maintain zero import taxes on British drug exports being sold in the American market.
The Terms of the Accord
As part of the deal, the UK has pledged to raise spending on medicines through the National Health Service (NHS). This pledge ensures that import taxes on these key goods will remain at nothing for a period of 36 months.
This development comes after earlier warnings to significantly raise tariffs on patented pharmaceutical products, with increases floated as high as one hundred percent.
"This arrangement between the UK reinforces the international landscape for cutting-edge drugs and brings long-overdue balance to American-British drug exports," an announcement noted.
Commercial Importance
Medicines constitute one of the Britain's biggest exports to the US, which is by far the biggest destination for large companies like GSK and AstraZeneca.
Statistics indicate that in the 12 months prior to last September, the UK sold drugs valued at over eleven billion pounds to the US. This amount accounted for a significant portion of British export trade in that period.
"This deal safeguards jobs, boosts investment and sets the stage for the UK to become a worldwide center for medical research," a minister commented.
Key NHS Changes
The deal involves several specific changes from the United Kingdom:
- Price Threshold Increase: The UK will raise the cost ceiling at which it judges new treatments to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a aim to double total health service expenditure on drugs from 0.3% of Gross Domestic Product to 0.6% over the next decade.
- Payback Limit: The amount pharmaceutical firms must refund to the NHS to stay within budget will be restricted at 15%. In the past, rebates were more than 20%.
Recent Tensions
The pact takes place against a ongoing tension between the drug companies and the ministers over drug pricing and approval rates.
The disagreement were exacerbated by claims that US patients were charged a premium for the same drugs than people in the other developed nations.
Over the last 18 months, several large manufacturing plans in the UK have been delayed or scrapped, while multi-billion-dollar funding commitments have been announced toward US facilities.
The Science Minister acknowledged that the NHS must invest a greater share on medicines, noting that its spending on drugs had shrunk as a proportion of its resources over the previous ten-year period.
