The UK and US have established a significant commercial pact that will preserve no import taxes on UK drug exports going into the American market.
Agreement Details of the Deal
As part of the deal, the UK has pledged to boost spending on pharmaceuticals through the public health system. This move ensures that duties on these key products will remain at nothing for a period of three years.
This deal is in response to recent warnings to dramatically increase duties on branded drug products, with increases discussed up to 100%.
"This agreement between the United Kingdom bolsters the global environment for innovative medicines and brings long-overdue equity to U.S.–U.K. medicine commerce," a release noted.
Commercial Significance
Pharmaceuticals represent one of the UK's most significant exports to the US, which is by far the primary destination for leading UK drugmakers.
Export figures show that in the one-year period leading up to last September, the UK exported drugs worth billions to the US. This amount accounted for nearly one-fifth of total UK exports in that period.
"This guarantee protects work, boosts capital expenditure and sets the stage for the UK to become a global hub for biotech and pharma," the Business and Trade Secretary commented.
Detailed NHS Changes
The pact includes several key changes from the British government:
- Price Threshold Increase: The UK will raise the price threshold at which it judges new medicines to be too expensive by a quarter.
- Higher Drug Budget: There is a aim to increase overall health service expenditure on medicines from 0.3 percent of the national economy to 0.6 percent over the coming ten years.
- Payback Limit: The percentage drug companies must pay back to the NHS to stay within budget will be restricted at fifteen percent. In the past, repayments exceeded 20%.
Recent Tensions
The deal comes amid a ongoing tension between the sector and the ministers over drug pricing and approval rates.
These tensions were exacerbated by claims that American customers were paying several times more for the equivalent treatments than consumers in the UK and Europe.
Over the last 18 months, several significant manufacturing plans in the UK have been halted or abandoned, while multi-billion-dollar funding commitments have been pledged toward projects in the United States.
One official acknowledged that the NHS must invest a greater share on drugs, noting that its expenditure on drugs had declined as a share of its overall budget over the last ten years.
