The United States and United Kingdom Announce Duty-Free Deal on Prescription Drugs.

The UK and US have signed a important trade agreement that will keep no import taxes on UK medicine products being sold in the American market.

The Terms of the Deal

Under the terms of the agreement, the UK has committed to raise funding on medicines through the public health system. This pledge secures that duties on these crucial products will stay at nothing for a duration of three years.

This development follows earlier statements to dramatically increase duties on branded pharmaceutical imports, with figures floated reaching double the cost.

"This arrangement between the UK strengthens the global environment for new treatments and establishes long-overdue equity to U.S.–U.K. medicine commerce," a release noted.

Economic Significance

Pharmaceuticals are one of the the United Kingdom's largest export categories to the America, which is clearly the biggest destination for large UK drugmakers.

Export figures reveal that in the year prior to last September, the UK exported pharmaceutical products worth billions to the US. This value represented nearly one-fifth of British export trade in that period.

"This guarantee safeguards work, stimulates capital expenditure and facilitates the UK to emerge as a global hub for life sciences," a government official stated.

Detailed UK Commitments

The agreement entails several specific pledges from the British government:

• Higher Cost Ceiling: The UK will increase the cost ceiling at which it deems new therapies to be too expensive by 25%.
• Higher Drug Budget: There is a target to raise overall NHS spending on medicines from 0.3 percent of the national economy to 0.6% over the following ten-year period.
• Refund Ceiling: The sum drug companies must pay back to the NHS to prevent overspending will be restricted at fifteen percent. In the past, refunds topped 20%.

Industry Background

This agreement takes place against a ongoing row between the sector and the British authorities over drug pricing and NHS adoption.

This friction were exacerbated by claims that US patients were paying a premium for the same drugs than people in the UK and Europe.

Over the last 18 months, several significant manufacturing plans in the UK have been delayed or abandoned, while major investments have been directed toward American operations.

The Science Minister publicly accepted that the NHS had to invest a greater share on medicines, noting that its spending on drugs had declined as a share of its overall budget over the past decade.