Britain and America have announced a major trade agreement that will maintain zero levies on British drug products going into the US market.
Key Provisions of the Accord
As part of the deal, the UK has agreed to raise spending on medicines through the National Health Service (NHS). This move guarantees that import taxes on these key products will stay at zero for a timeframe of 36 months.
This deal is in response to previous warnings to significantly raise duties on patented pharmaceutical imports, with figures discussed reaching 100%.
"This arrangement between the Britain strengthens the international landscape for innovative medicines and brings long-overdue equity to transatlantic drug exports," a release said.
Commercial Significance
Medicines constitute one of the Britain's biggest export categories to the America, which is easily the largest buyer for large companies like GSK and AstraZeneca.
Statistics indicate that in the one-year period leading up to September, the UK sold drugs totaling billions to the US. This value accounted for 17.4% of total UK exports in that span.
"This agreement protects jobs, stimulates investment and paves the way for the UK to establish itself as a worldwide center for life sciences," a minister stated.
Specific UK Commitments
The agreement includes several key commitments from the UK:
- Revised Affordability Limit: The UK will raise the affordability limit at which it considers new therapies to be prohibitively costly by a quarter.
- Boosted Medicine Funding: There is a target to increase overall health service expenditure on drugs from 0.3 percent of GDP to 0.6% over the following ten-year period.
- Refund Ceiling: The sum drug companies must pay back to the NHS to control costs will be limited at 15%. In the past, repayments were more than 20%.
Broader Context
This agreement takes place against a long-running row between the drug companies and the UK government over spending levels and NHS adoption.
This friction were heightened by arguments that American consumers were charged several times more for the same drugs than patients in the other developed nations.
Over the last 18 months, several large drug company projects in the UK have been paused or abandoned, while multi-billion-dollar expansions have been announced toward American operations.
The Science Minister stated that the NHS must invest a greater share on medicines, noting that its expenditure on drugs had shrunk as a proportion of its overall budget over the last ten years.
