The United States and United Kingdom Strike Duty-Free Agreement on Drugs.
The United Kingdom and the United States have concluded a major bilateral deal that will maintain no import taxes on British drug products going into the US market.
The Terms of the Deal
Under the terms of the agreement, the UK has pledged to increase expenditure on pharmaceuticals through the National Health Service (NHS). This move ensures that import taxes on these key goods will stay at zero for a timeframe of the next three years.
This agreement follows recent statements to significantly raise tariffs on branded pharmaceutical products, with increases floated up to double the cost.
"This arrangement between the Britain reinforces the worldwide climate for cutting-edge drugs and introduces much-needed balance to transatlantic medicine commerce," a statement noted.
Commercial Impact
Pharmaceuticals are one of the Britain's most significant export categories to the US, which is by far the biggest buyer for major companies like GSK and AstraZeneca.
Trade data indicate that in the 12 months prior to last September, the UK sold drugs totaling over eleven billion pounds to the US. This amount represented 17.4% of all goods exports in that period.
"This agreement protects employment, stimulates capital expenditure and sets the stage for the UK to emerge as a worldwide center for life sciences," a minister remarked.
Specific British Pledges
The pact entails several specific pledges from the United Kingdom:
- Revised Affordability Limit: The UK will lift the cost ceiling at which it deems new therapies to be unaffordable by twenty-five percent.
- Increased NHS Spending: There is a target to double overall NHS spending on treatments from 0.3 percent of Gross Domestic Product to 0.6% over the next decade.
- Rebate Cap: The sum manufacturers must pay back to the NHS to control costs will be restricted at fifteen percent. Previously, rebates were more than 20%.
Industry Background
The deal comes amid a long-running tension between the pharmaceutical industry and the UK government over spending levels and approval rates.
The disagreement were intensified by claims that US patients were charged significantly more for the same drugs 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 abandoned, while multi-billion-dollar investments have been announced toward projects in the United States.
One official publicly accepted that the NHS must invest a greater share on drugs, noting that its spending on drugs had declined as a percentage of its overall budget over the previous ten-year period.
