The United Kingdom and the United States have agreed to a landmark commercial pact that will guarantee no tariffs on UK medicine products being sold in the US market.
The Terms of the Deal
Under the terms of the agreement, the UK has pledged to raise funding on medicines through the public health system. This pledge secures that tariffs on these vital products will stay at nothing for a duration of 36 months.
This agreement is in response to recent statements to dramatically increase import taxes on patented pharmaceutical products, with increases discussed up to double the cost.
"This agreement with the United Kingdom strengthens the global environment for innovative medicines and brings long-overdue balance to American-British medicine commerce," a statement said.
Commercial Importance
Medicines are one of the Britain's most significant goods shipped to the US, which is by far the primary buyer for large companies like GSK and AstraZeneca.
Export figures indicate that in the one-year period to the end of the third quarter, the UK shipped drugs valued at over eleven billion pounds to the US. This amount made up a significant portion of British export trade in that timeframe.
"This guarantee safeguards employment, increases investment and sets the stage for the UK to become a worldwide center for life sciences," the Business and Trade Secretary remarked.
Specific NHS Changes
The agreement includes several notable pledges from the United Kingdom:
- Price Threshold Increase: The UK will raise the price threshold at which it judges new treatments to be too expensive by 25%.
- Increased NHS Spending: There is a target to double total NHS spending on medicines from 0.3% of GDP to 0.6% over the next decade.
- Payback Limit: The amount pharmaceutical firms must pay back to the NHS to prevent overspending will be limited at 15%. Last year, repayments were more than 20%.
Recent Tensions
This agreement comes amid a protracted dispute between the drug companies and the ministers over drug pricing and NHS adoption.
The disagreement were heightened by arguments that American patients were paying a premium for the equivalent treatments than patients in the Britain and the EU.
Over the last 18 months, several major manufacturing plans in the UK have been delayed or scrapped, while multi-billion-dollar investments have been announced toward projects in the United States.
One official publicly accepted that the NHS needed to spend more on treatments, noting that its budget allocation on drugs had shrunk as a percentage of its overall budget over the past decade.
