The UK and US have reached a landmark commercial pact that will keep no levies on British pharmaceutical products going into the American market.
The Terms of the Accord
Under the terms of the agreement, the UK has agreed to raise expenditure on medicines through the public health system. This move ensures that import taxes on these vital exports will be held at nothing for a timeframe of three years.
This deal follows earlier statements to hike import taxes on patented pharmaceutical imports, with increases mentioned up to double the cost.
"This agreement with the United Kingdom strengthens the global environment for cutting-edge drugs and establishes long-overdue equity to American-British pharmaceutical trade," an announcement said.
Commercial Impact
Pharmaceuticals are one of the the United Kingdom's biggest export categories to the United States, which is easily the biggest buyer for leading British pharmaceutical firms.
Statistics reveal that in the 12 months prior to last September, the UK sold medicines worth over eleven billion pounds to the US. This figure made up 17.4% of all goods exports in that period.
"This agreement safeguards jobs, stimulates capital expenditure and paves the way for the UK to become a international leader for medical research," a government official remarked.
Key NHS Changes
The pact involves several specific changes from the United Kingdom:
- Revised Affordability Limit: The UK will raise the cost ceiling at which it considers new medicines to be too expensive by 25%.
- Increased NHS Spending: There is a target to raise total public funding on treatments from 0.3% of GDP to 0.6% over the following ten-year period.
- Payback Limit: The amount manufacturers must pay back to the NHS to control costs will be limited at 15%. Previously, refunds exceeded 20%.
Industry Background
The pact follows a ongoing row between the drug companies and the ministers over medicine costs and approval rates.
These tensions were heightened by arguments that American customers were paying significantly more for the same drugs than consumers in the other developed nations.
In recent months, several significant drug company projects in the UK have been halted or abandoned, while multi-billion-dollar investments have been announced toward US facilities.
A senior figure publicly accepted that the NHS needed to increase expenditure on treatments, noting that its expenditure on drugs had declined as a percentage of its resources over the past decade.
