The UK and US have reached a important bilateral deal that will preserve no tariffs on British pharmaceutical shipments entering the American market.
The Terms of the Pact
Under the terms of the agreement, the UK has committed to increase funding on drugs through the public health system. This pledge guarantees that tariffs on these crucial exports will remain at nothing for a duration of the next three years.
This agreement comes after earlier warnings to hike tariffs on branded drug products, with increases mentioned as high as 100%.
"This agreement with the UK strengthens the international landscape for cutting-edge drugs and establishes much-needed equity to transatlantic drug exports," a release noted.
Commercial Impact
Medicines are one of the UK's biggest export categories to the United States, which is by far the largest destination for large companies like GSK and AstraZeneca.
Statistics show that in the year prior to the third quarter, the UK shipped drugs totaling billions to the US. This figure accounted for nearly one-fifth of all goods exports in that timeframe.
"This deal secures employment, increases investment and sets the stage for the UK to emerge as a international leader for biotech and pharma," the Business and Trade Secretary remarked.
Specific UK Commitments
The pact entails several specific commitments from the British government:
- Revised Affordability Limit: The UK will increase the cost ceiling at which it deems new treatments to be too expensive by 25%.
- Boosted Medicine Funding: There is a target to double total public funding on medicines from 0.3 percent of Gross Domestic Product to 0.6% over the coming ten years.
- Refund Ceiling: The amount manufacturers must refund to the NHS to stay within budget will be limited at fifteen percent. Last year, rebates were more than 20%.
Industry Background
The deal comes amid a long-running row between the drug companies and the ministers over medicine costs and approval rates.
These tensions were exacerbated by arguments that US customers were paying significantly more for the equivalent treatments than patients in the Britain and the EU.
Over the last 18 months, several significant drug company projects in the UK have been halted or cancelled, while multi-billion-dollar expansions have been directed toward US facilities.
The Science Minister publicly accepted that the NHS must increase expenditure on medicines, noting that its budget allocation on drugs had shrunk as a percentage of its total funding over the past decade.
