Britain and America have hammered out a significant commercial pact that will guarantee zero levies on UK drug shipments being sold in the American market.
The Terms of the Pact
As part of the deal, the UK has agreed to raise spending on drugs through the public health system. This pledge ensures that duties on these vital products will remain at zero for a timeframe of the next three years.
This agreement comes after earlier statements to significantly raise tariffs on patented drug imports, with increases mentioned as high as one hundred percent.
"This agreement between the UK reinforces the worldwide climate for innovative medicines and establishes long-overdue balance to transatlantic pharmaceutical trade," a release noted.
Commercial Importance
Drugs represent one of the UK's biggest goods shipped to the US, which is by far the biggest destination for leading companies like GSK and AstraZeneca.
Statistics show that in the year prior to last September, the UK sold medicines totaling over eleven billion pounds to the US. This amount made up nearly one-fifth of all goods exports in that timeframe.
"This agreement safeguards work, stimulates investment and facilitates the UK to become a global hub for medical research," the Business and Trade Secretary commented.
Detailed British Pledges
The pact includes several notable commitments from the British government:
- 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 target to double overall health service expenditure on drugs from 0.3 percent of GDP to 0.6 percent over the next decade.
- Payback Limit: The percentage manufacturers must return to the NHS to prevent overspending will be restricted at 15%. In the past, rebates exceeded twenty percent.
Industry Background
This agreement comes amid a long-running dispute between the drug companies and the UK government over medicine costs and approval rates.
These tensions were intensified by claims that US patients were paying a premium for the equivalent treatments than patients in the UK and Europe.
Over the last 18 months, several large pharmaceutical investments in the UK have been halted or scrapped, while major investments have been pledged toward American operations.
One official publicly accepted that the NHS must increase expenditure on drugs, noting that its expenditure on drugs had declined as a proportion of its total funding over the previous ten-year period.
