The UK and US have hammered out a major bilateral deal that will maintain zero levies on UK drug exports being sold in the US market.
Key Provisions of the Deal
As part of the deal, the UK has committed to boost funding on drugs through the NHS. This commitment guarantees that tariffs on these key goods will be held at nothing for a timeframe of three years.
This deal follows previous warnings to hike import taxes on branded drug imports, with potential rates discussed up to double the cost.
"This arrangement with the UK bolsters the worldwide climate for new treatments and introduces long-overdue fairness to American-British medicine commerce," a release said.
Trade Significance
Drugs are one of the the United Kingdom's largest goods shipped to the US, which is by far the primary market for large companies like GSK and AstraZeneca.
Export figures indicate that in the year leading up to the third quarter, the UK exported medicines totaling £11.1bn to the US. This value made up 17.4% of total UK exports in that span.
"This agreement safeguards employment, increases investment and facilitates the UK to emerge as a global hub for biotech and pharma," the Business and Trade Secretary remarked.
Specific UK Commitments
The agreement includes several key changes from the UK:
- Revised Affordability Limit: The UK will lift the affordability limit at which it deems new medicines to be prohibitively costly by 25%.
- Boosted Medicine Funding: There is a goal to increase overall NHS spending on drugs from 0.3 percent of the national economy to 0.6 percent over the following ten-year period.
- Refund Ceiling: The sum manufacturers must refund to the NHS to prevent overspending will be limited at 15%. Previously, refunds were more than 20%.
Broader Context
The deal takes place against a long-running tension between the drug companies and the ministers over drug pricing and regulatory access.
The disagreement were exacerbated by arguments that US patients were charged several times more for the equivalent treatments than patients in the UK and Europe.
Over the last 18 months, several major drug company projects in the UK have been paused or abandoned, while multi-billion-dollar expansions have been announced toward projects in the United States.
One official acknowledged that the NHS had to spend more on treatments, noting that its spending on drugs had declined as a proportion of its resources over the past decade.
