The United Kingdom and the United States have reached a significant trade agreement that will guarantee no duties on British pharmaceutical shipments going into the American market.
The Terms of the Accord
As part of the deal, the UK has committed to raise funding on drugs through the National Health Service (NHS). This move secures that duties on these vital products will stay at zero for a timeframe of 36 months.
This deal follows recent statements to dramatically increase import taxes on patented pharmaceutical products, with increases mentioned reaching one hundred percent.
"This arrangement with the United Kingdom bolsters the global environment for cutting-edge drugs and establishes much-needed balance to U.S.–U.K. drug exports," a statement said.
Commercial Importance
Pharmaceuticals represent one of the Britain's biggest export categories to the United States, which is by far the primary market for leading UK drugmakers.
Trade data show that in the year prior to September, the UK exported drugs worth over eleven billion pounds to the US. This amount accounted for a significant portion of all goods exports in that timeframe.
"This agreement protects jobs, stimulates investment and sets the stage for the UK to establish itself as a worldwide center for life sciences," the Business and Trade Secretary remarked.
Detailed UK Commitments
The agreement includes several notable commitments from the British government:
- Higher Cost Ceiling: The UK will lift the cost ceiling at which it deems new treatments to be too expensive by a quarter.
- Higher Drug Budget: There is a target to double total public funding on medicines from 0.3 percent of Gross Domestic Product to 0.6% over the next decade.
- Refund Ceiling: The sum drug companies must refund to the NHS to control costs will be limited at 15%. Last year, repayments were more than 20%.
Broader Context
The deal takes place against a ongoing dispute between the pharmaceutical industry and the British authorities over drug pricing and approval rates.
These tensions were heightened by arguments that US consumers were paying significantly more for the equivalent treatments than people in the Britain and the EU.
In recent months, several significant pharmaceutical investments in the UK have been delayed or cancelled, while major funding commitments have been announced toward American operations.
One official publicly accepted that the NHS needed to invest a greater share on treatments, noting that its spending on drugs had shrunk as a proportion of its overall budget over the last ten years.
