The UK and US have concluded a important trade agreement that will guarantee zero import taxes on British drug shipments being sold in the US market.
Key Provisions of the Deal
As part of the deal, the UK has pledged to boost expenditure on pharmaceuticals through the National Health Service (NHS). This move ensures that import taxes on these key goods will remain at zero for a timeframe of three years.
This agreement follows recent warnings to dramatically increase duties on patented pharmaceutical imports, with figures discussed reaching one hundred percent.
"This arrangement between the Britain reinforces the global environment for new treatments and brings much-needed balance to U.S.–U.K. pharmaceutical trade," an announcement noted.
Trade Significance
Pharmaceuticals represent one of the Britain's largest export categories to the United States, which is clearly the primary market for large companies like GSK and AstraZeneca.
Trade data show that in the 12 months prior to last September, the UK sold pharmaceutical products totaling £11.1bn to the US. This figure made up nearly one-fifth of all goods exports in that timeframe.
"This guarantee safeguards employment, stimulates capital expenditure and sets the stage for the UK to become a global hub for life sciences," the Business and Trade Secretary stated.
Key NHS Changes
The deal entails several specific pledges from the UK:
- Price Threshold Increase: The UK will raise the cost ceiling at which it judges new therapies to be unaffordable by a quarter.
- Increased NHS Spending: There is a aim to double total health service expenditure on drugs from 0.3 percent of GDP to 0.6% over the following ten-year period.
- Rebate Cap: The sum manufacturers must return to the NHS to control costs will be restricted at fifteen percent. Last year, refunds were more than twenty percent.
Recent Tensions
The deal takes place against a long-running row between the sector and the UK government over drug pricing and approval rates.
These tensions were intensified by assertions that US customers were charged a premium for the same drugs than patients in the other developed nations.
In recent months, several major pharmaceutical investments in the UK have been delayed or abandoned, while multi-billion-dollar expansions have been pledged toward American operations.
The Science Minister publicly accepted that the NHS needed to spend more on medicines, noting that its expenditure on drugs had decreased as a proportion of its resources over the previous ten-year period.
