The UK and US have forged a key trade agreement that will ensure no levies on UK pharmaceutical products being sold in the US market.
The Terms of the Pact
Under the terms of the agreement, the UK has pledged to increase expenditure on drugs through the NHS. This pledge ensures that tariffs on these vital exports will be held at nothing for a period of three years.
This development is in response to earlier statements to hike tariffs on patented pharmaceutical products, with potential rates floated as high as double the cost.
"This agreement between the United Kingdom bolsters the global environment for innovative medicines and establishes much-needed equity to transatlantic pharmaceutical trade," a release noted.
Economic Significance
Pharmaceuticals represent one of the Britain's biggest export categories to the United States, which is easily the largest buyer for large companies like GSK and AstraZeneca.
Statistics reveal that in the one-year period leading up to the third quarter, the UK exported drugs worth £11.1bn to the US. This amount made up a significant portion of total UK exports in that span.
"This agreement protects jobs, increases funding and facilitates the UK to emerge as a worldwide center for life sciences," a minister commented.
Detailed NHS Changes
The pact includes several notable changes from the United Kingdom:
- Revised Affordability Limit: The UK will lift the price threshold at which it deems new treatments to be too expensive by a quarter.
- Increased NHS Spending: There is a goal to increase total NHS spending on treatments from 0.3% of the national economy to 0.6 percent over the following ten-year period.
- Refund Ceiling: The sum drug companies must refund to the NHS to prevent overspending will be capped at fifteen percent. Last year, rebates exceeded twenty percent.
Broader Context
This agreement follows a ongoing row between the pharmaceutical industry and the British authorities over medicine costs and approval rates.
The disagreement were exacerbated by claims that American customers were charged several times more for the same drugs than people in the Britain and the EU.
Over the last 18 months, several major manufacturing plans in the UK have been delayed or abandoned, while substantial funding commitments have been pledged toward American operations.
One official acknowledged that the NHS had to invest a greater share on drugs, noting that its spending on drugs had declined as a proportion of its overall budget over the last ten years.
