Britain and America have reached a major commercial pact that will maintain no tariffs on British drug products being sold in the American market.
The Terms of the Pact
As part of the deal, the UK has committed to boost expenditure on medicines through the public health system. This commitment ensures that duties on these key products will be held at zero for a period of the next three years.
This deal follows previous statements to hike duties on patented drug imports, with potential rates floated as high as 100%.
"This arrangement with the United Kingdom strengthens the worldwide climate for innovative medicines and brings long-overdue fairness to transatlantic medicine commerce," a release noted.
Trade Significance
Drugs are one of the the United Kingdom's biggest goods shipped to the US, which is clearly the largest destination for major companies like GSK and AstraZeneca.
Trade data indicate that in the one-year period prior to September, the UK sold drugs worth £11.1bn to the US. This figure made up 17.4% of British export trade in that timeframe.
"This agreement secures jobs, increases funding and sets the stage for the UK to emerge as a international leader for medical research," a government official commented.
Specific British Pledges
The pact entails several key pledges from the British government:
- Price Threshold Increase: The UK will raise the cost ceiling at which it judges new medicines to be too expensive by 25%.
- Boosted Medicine Funding: There is a goal to double overall NHS spending on medicines from 0.3 percent of GDP to 0.6 percent over the next decade.
- Payback Limit: The amount pharmaceutical firms must pay back to the NHS to stay within budget will be restricted at 15%. In the past, rebates were more than twenty percent.
Industry Background
The deal takes place against a long-running dispute between the drug companies and the ministers over medicine costs and approval rates.
This friction were heightened by arguments that US consumers were paying significantly more for the same drugs than patients in the Britain and the EU.
Over the last 18 months, several major pharmaceutical investments in the UK have been halted or cancelled, while substantial funding commitments have been announced toward US facilities.
The Science Minister publicly accepted that the NHS must increase expenditure on drugs, noting that its budget allocation on drugs had decreased as a percentage of its total funding over the past decade.
