America and Britain Sign No-Tariff Accord on Medicines.

The UK and US have hammered out a major bilateral deal that will maintain zero import taxes on UK pharmaceutical products going into the American market.

The Terms of the Deal

In exchange for the tariff guarantee, the UK has pledged to increase expenditure on medicines through the National Health Service (NHS). This move guarantees that duties on these vital exports will stay at zero for a duration of the next three years.

This development follows previous threats to dramatically increase tariffs on branded drug products, with increases floated as high as one hundred percent.

"This deal with the UK bolsters the international landscape for new treatments and brings long-overdue fairness to transatlantic pharmaceutical trade," an announcement said.

Commercial Impact

Pharmaceuticals are one of the UK's biggest export categories to the US, which is easily the biggest buyer for large companies like GSK and AstraZeneca.

Export figures show that in the one-year period leading up to last September, the UK shipped pharmaceutical products worth billions to the US. This value accounted for nearly one-fifth of all goods exports in that period.

"This agreement protects work, increases funding and facilitates the UK to become a international leader for medical research," a minister commented.

Specific UK Commitments

The agreement entails several specific pledges from the British government:

• Price Threshold Increase: The UK will raise the affordability limit at which it judges new medicines to be prohibitively costly by a quarter.
• Higher Drug Budget: There is a target to double total public funding on treatments from 0.3% of Gross Domestic Product to 0.6 percent over the next decade.
• Payback Limit: The amount pharmaceutical firms must pay back to the NHS to control costs will be capped at fifteen percent. Previously, refunds exceeded 20%.

Industry Background

The deal takes place against a long-running tension between the sector and the ministers over spending levels and regulatory access.

The disagreement were exacerbated by assertions that US customers were paying a premium for the identical medicines than people in the Britain and the EU.

Over the last 18 months, several large pharmaceutical investments in the UK have been delayed or abandoned, while substantial funding commitments have been pledged toward American operations.

The Science Minister publicly accepted that the NHS must invest a greater share on treatments, noting that its expenditure on drugs had declined as a proportion of its resources over the last ten years.