The UK and US have hammered out a key trade agreement that will guarantee no duties on British drug shipments being sold in the US market.
Key Provisions of the Pact
Under the terms of the agreement, the UK has agreed to raise expenditure on drugs through the NHS. This move secures that import taxes on these vital goods will stay at nothing for a period of the next three years.
This deal comes after earlier warnings to hike duties on branded drug imports, with figures discussed reaching double the cost.
"This deal between the UK strengthens the international landscape for innovative medicines and brings much-needed equity to U.S.–U.K. medicine commerce," a release noted.
Economic Significance
Medicines are one of the Britain's largest goods shipped to the America, which is clearly the biggest destination for large British pharmaceutical firms.
Statistics show that in the 12 months to the end of the third quarter, the UK exported pharmaceutical products valued at £11.1bn to the US. This figure accounted for 17.4% of total UK exports in that timeframe.
"This agreement safeguards work, increases funding and facilitates the UK to become a global hub for biotech and pharma," a minister remarked.
Detailed NHS Changes
The pact includes several key changes from the UK:
- Revised Affordability Limit: The UK will lift the affordability limit at which it deems new therapies to be unaffordable by 25%.
- Higher Drug Budget: There is a aim to raise total NHS spending on drugs from 0.3% of Gross Domestic Product to 0.6 percent over the next decade.
- Refund Ceiling: The sum manufacturers must refund to the NHS to control costs will be capped at fifteen percent. In the past, rebates exceeded twenty percent.
Industry Background
The pact comes amid a long-running row between the drug companies and the British authorities over spending levels and NHS adoption.
The disagreement were intensified by claims that American customers were paying a premium for the equivalent treatments than people in the Britain and the EU.
In recent months, several major pharmaceutical investments in the UK have been delayed or abandoned, while major investments have been pledged toward American operations.
A senior figure acknowledged that the NHS needed to invest a greater share on drugs, noting that its expenditure on drugs had shrunk as a percentage of its resources over the past decade.
