Britain and America have forged a key commercial pact that will preserve zero duties on British drug products entering the American market.
The Terms of the Pact
Under the terms of the agreement, the UK has pledged to increase spending on drugs 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 comes after recent warnings to hike duties on branded drug imports, with increases discussed up to 100%.
"This agreement with the UK bolsters the global environment for new treatments and establishes long-overdue fairness to U.S.–U.K. drug exports," a statement declared.
Commercial Significance
Drugs represent one of the the United Kingdom's biggest goods shipped to the United States, which is easily the biggest destination for leading companies like GSK and AstraZeneca.
Export figures indicate that in the year prior to September, the UK exported medicines worth billions to the US. This figure accounted for 17.4% of British export trade in that timeframe.
"This deal secures employment, boosts capital expenditure and sets the stage for the UK to establish itself as a worldwide center for medical research," the Business and Trade Secretary stated.
Key UK Commitments
The pact includes several key pledges from the UK:
- Revised Affordability Limit: The UK will lift the price threshold at which it considers new therapies to be too expensive by a quarter.
- Boosted Medicine Funding: There is a aim to increase total health service expenditure on treatments from 0.3 percent of Gross Domestic Product to 0.6 percent over the coming ten years.
- Refund Ceiling: The sum pharmaceutical firms must refund to the NHS to prevent overspending will be restricted at fifteen percent. In the past, rebates topped twenty percent.
Broader Context
This agreement follows a ongoing row between the drug companies and the ministers over medicine costs and approval rates.
This friction were exacerbated by claims that American patients were paying a premium for the same drugs than people in the Britain and the EU.
Over the last 18 months, several significant drug company projects in the UK have been delayed or abandoned, while major investments have been directed toward projects in the United States.
The Science Minister acknowledged that the NHS needed to spend more on medicines, noting that its spending on drugs had decreased as a share of its total funding over the previous ten-year period.
