Britain and America have hammered out a major bilateral deal that will maintain zero levies on UK medicine exports going into the American market.
Key Provisions of the Deal
As part of the deal, the UK has agreed to raise funding on medicines through the public health system. This pledge guarantees that duties on these key exports will be held at nothing for a timeframe of three years.
This deal follows recent threats to hike duties on patented drug imports, with potential rates discussed as high as 100%.
"This arrangement with the UK bolsters the global environment for new treatments and brings much-needed balance to U.S.–U.K. drug exports," an announcement declared.
Commercial Importance
Pharmaceuticals constitute one of the UK's most significant export categories to the US, which is by far the biggest destination for leading companies like GSK and AstraZeneca.
Export figures indicate that in the year prior to September, the UK exported pharmaceutical products worth over eleven billion pounds to the US. This value made up a significant portion of British export trade in that period.
"This agreement secures employment, increases funding and sets the stage for the UK to emerge as a worldwide center for medical research," a minister stated.
Key NHS Changes
The deal entails several key changes from the UK:
- Higher Cost Ceiling: The UK will lift the price threshold at which it considers new medicines to be unaffordable by a quarter.
- Increased NHS Spending: There is a target to raise overall NHS spending on medicines from 0.3% of Gross Domestic Product to 0.6 percent over the following ten-year period.
- Rebate Cap: The percentage drug companies must pay back to the NHS to stay within budget will be limited at 15%. In the past, rebates were more than 20%.
Recent Tensions
The pact follows a long-running tension between the drug companies and the ministers over medicine costs and regulatory access.
These tensions were heightened by claims that American patients were paying a premium for the identical medicines than consumers in the Britain and the EU.
Over the last 18 months, several large drug company projects in the UK have been paused or abandoned, while major expansions have been directed toward US facilities.
One official publicly accepted that the NHS needed to spend more on drugs, noting that its expenditure on drugs had declined as a percentage of its overall budget over the past decade.
