The United States and United Kingdom Strike No-Tariff Accord on Medicines.

The UK and US have secured a landmark commercial pact that will preserve no import taxes on British pharmaceutical exports going into the US market.

Agreement Details of the Pact

As part of the deal, the UK has committed to raise expenditure on drugs through the NHS. This pledge ensures that import taxes on these crucial exports will stay at zero for a period of 36 months.

This agreement is in response to previous warnings to significantly raise duties on patented pharmaceutical products, with increases floated reaching one hundred percent.

"This arrangement with the United Kingdom reinforces the global environment for cutting-edge drugs and introduces long-overdue fairness to transatlantic drug exports," a statement declared.

Trade Impact

Medicines are one of the the United Kingdom's biggest exports to the US, which is by far the largest destination for large UK drugmakers.

Export figures show that in the year leading up to last September, the UK sold drugs worth billions to the US. This figure accounted for nearly one-fifth of all goods exports in that timeframe.

"This deal protects employment, boosts investment and sets the stage for the UK to emerge as a global hub for medical research," the Business and Trade Secretary remarked.

Specific British Pledges

The deal includes several specific pledges from the British government:

• Higher Cost Ceiling: The UK will increase the cost ceiling at which it deems new treatments to be prohibitively costly by 25%.
• Higher Drug Budget: There is a aim to raise total public funding on medicines from 0.3% of GDP to 0.6 percent over the coming ten years.
• Rebate Cap: The amount drug companies must return to the NHS to stay within budget will be limited at fifteen percent. In the past, rebates topped twenty percent.

Industry Background

This agreement follows a protracted tension between the drug companies and the British authorities over medicine costs and NHS adoption.

The disagreement were exacerbated by assertions that US customers were paying several times more for the same drugs than patients in the UK and Europe.

Recently, several major pharmaceutical investments in the UK have been delayed or abandoned, while major investments have been pledged toward US facilities.

One official publicly accepted that the NHS needed to increase expenditure on drugs, noting that its budget allocation on drugs had decreased as a share of its overall budget over the last ten years.