The UK and US have established a key bilateral deal that will maintain no levies on UK pharmaceutical exports going into the American market.
The Terms of the Accord
Under the terms of the agreement, the UK has agreed to raise expenditure on drugs through the public health system. This pledge guarantees that import taxes on these crucial exports will remain at zero for a timeframe of the next three years.
This deal comes after recent statements to dramatically increase tariffs on branded drug products, with increases discussed as high as double the cost.
"This arrangement with the Britain strengthens the worldwide climate for innovative medicines and brings much-needed fairness to U.S.–U.K. drug exports," a release noted.
Commercial Importance
Medicines constitute one of the the United Kingdom's biggest goods shipped to the US, which is clearly the largest market for major UK drugmakers.
Export figures reveal that in the 12 months prior to last September, the UK sold pharmaceutical products valued at over eleven billion pounds to the US. This amount accounted for a significant portion of total UK exports in that span.
"This agreement secures employment, increases funding and sets the stage for the UK to become a worldwide center for medical research," the Business and Trade Secretary remarked.
Detailed NHS Changes
The agreement entails several key changes from the British government:
- Higher Cost Ceiling: The UK will lift the affordability limit at which it considers new therapies to be prohibitively costly by 25%.
- Higher Drug Budget: There is a aim to raise overall public funding on treatments from 0.3% of GDP to 0.6% over the next decade.
- Rebate Cap: The percentage pharmaceutical firms must return to the NHS to prevent overspending will be capped at fifteen percent. Last year, refunds were more than 20%.
Industry Background
The pact comes amid a long-running row between the sector and the ministers over medicine costs and regulatory access.
The disagreement were exacerbated by arguments that US consumers were charged a premium for the same drugs than consumers in the UK and Europe.
Recently, several significant pharmaceutical investments in the UK have been delayed or cancelled, while substantial funding commitments have been pledged toward American operations.
A senior figure publicly accepted that the NHS had to invest a greater share on medicines, noting that its budget allocation on drugs had declined as a percentage of its resources over the last ten years.
