Britain and America have announced a landmark bilateral deal that will ensure no import taxes on British pharmaceutical exports being sold in the American market.
The Terms of the Deal
As part of the deal, the UK has agreed to increase spending on medicines through the National Health Service (NHS). This pledge secures that import taxes on these vital exports will stay at zero for a timeframe of 36 months.
This deal comes after recent statements to dramatically increase tariffs on patented pharmaceutical products, with increases discussed reaching one hundred percent.
"This deal between the United Kingdom bolsters the international landscape for new treatments and establishes long-overdue balance to transatlantic drug exports," an announcement said.
Economic Impact
Medicines constitute one of the the United Kingdom's largest export categories to the America, which is easily the biggest market for leading UK drugmakers.
Trade data show that in the 12 months prior to September, the UK shipped drugs worth billions to the US. This value accounted for 17.4% of total UK exports in that timeframe.
"This agreement secures work, stimulates funding and sets the stage for the UK to emerge as a international leader for medical research," a minister commented.
Detailed NHS Changes
The deal involves several specific changes from the United Kingdom:
- Price Threshold Increase: The UK will lift the cost ceiling at which it judges new therapies to be prohibitively costly by a quarter.
- Increased NHS Spending: There is a target to raise total public funding on drugs from 0.3 percent of Gross Domestic Product to 0.6% over the following ten-year period.
- Payback Limit: The amount pharmaceutical firms must refund to the NHS to stay within budget will be restricted at 15%. Last year, repayments were more than 20%.
Industry Background
This agreement takes place against a protracted tension between the drug companies and the British authorities over spending levels and regulatory access.
These tensions were intensified by assertions that American customers were paying a premium for the equivalent treatments than patients in the Britain and the EU.
Recently, several major manufacturing plans in the UK have been paused or abandoned, while multi-billion-dollar expansions have been directed toward US facilities.
The Science Minister publicly accepted that the NHS must increase expenditure on treatments, noting that its budget allocation on drugs had declined as a percentage of its resources over the previous ten-year period.
