Britain and America have reached a major commercial pact that will preserve zero duties on British drug shipments going into the US market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has pledged to raise spending on pharmaceuticals through the National Health Service (NHS). This move secures that import taxes on these vital goods will stay at zero for a period of 36 months.
This deal comes after previous warnings to hike duties on branded pharmaceutical products, with increases floated up to double the cost.
"This agreement between the United Kingdom strengthens the worldwide climate for innovative medicines and brings long-overdue balance to transatlantic pharmaceutical trade," a release said.
Economic Impact
Pharmaceuticals constitute one of the the United Kingdom's largest export categories to the US, which is by far the primary destination for large UK drugmakers.
Statistics reveal that in the year to the end of September, the UK exported pharmaceutical products worth billions to the US. This value represented 17.4% of total UK exports in that period.
"This guarantee secures employment, increases capital expenditure and sets the stage for the UK to establish itself as a worldwide center for life sciences," a government official stated.
Key NHS Changes
The pact entails several specific pledges from the United Kingdom:
- Price Threshold Increase: The UK will increase the cost ceiling at which it deems new treatments to be too expensive by a quarter.
- Increased NHS Spending: There is a goal to double overall public funding on medicines from 0.3 percent of GDP to 0.6 percent over the coming ten years.
- Rebate Cap: The amount manufacturers must refund to the NHS to prevent overspending will be limited at 15%. Last year, refunds exceeded 20%.
Recent Tensions
This agreement comes amid a ongoing row between the pharmaceutical industry and the UK government over medicine costs and NHS adoption.
This friction were intensified by claims that US consumers were paying a premium for the equivalent treatments than consumers in the UK and Europe.
Over the last 18 months, several large manufacturing plans in the UK have been halted or abandoned, while multi-billion-dollar investments have been directed toward American operations.
One official publicly accepted that the NHS needed to invest a greater share on drugs, noting that its spending on drugs had decreased as a proportion of its total funding over the previous ten-year period.
