The United Kingdom and the United States have forged a important bilateral deal that will preserve no import taxes on British medicine exports going into the US market.
The Terms of the Pact
Under the terms of the agreement, the UK has agreed to raise spending on medicines through the NHS. This move guarantees that duties on these vital goods will be held at zero for a period of three years.
This deal follows recent threats to hike duties on branded drug imports, with figures floated up to 100%.
"This arrangement with the United Kingdom strengthens the global environment for innovative medicines and introduces much-needed equity to American-British drug exports," an announcement said.
Commercial Impact
Drugs represent one of the Britain's largest export categories to the US, which is by far the biggest market for large companies like GSK and AstraZeneca.
Export figures indicate that in the one-year period leading up to last September, the UK exported medicines worth billions to the US. This value made up nearly one-fifth of all goods exports in that span.
"This deal protects employment, stimulates investment and facilitates the UK to establish itself as a worldwide center for medical research," a minister stated.
Specific NHS Changes
The agreement entails several specific changes from the UK:
- Price Threshold Increase: The UK will lift the price threshold at which it judges new treatments to be prohibitively costly by 25%.
- Higher Drug Budget: There is a aim to raise overall health service expenditure on treatments from 0.3% of the national economy to 0.6% over the coming ten years.
- Rebate Cap: The percentage pharmaceutical firms must refund to the NHS to stay within budget will be capped at fifteen percent. In the past, refunds topped twenty percent.
Industry Background
This agreement follows a ongoing tension between the drug companies and the British authorities over medicine costs and approval rates.
The disagreement were exacerbated by claims that US consumers were paying several times more for the equivalent treatments than people in the other developed nations.
In recent months, several major drug company projects in the UK have been delayed or scrapped, while major funding commitments have been announced toward projects in the United States.
One official stated that the NHS must invest a greater share on drugs, noting that its spending on drugs had shrunk as a proportion of its overall budget over the previous ten-year period.
