The United Kingdom and the United States have finalized a deal to maintain zero tariffs on UK pharmaceuticals exported to the US for the next three years. This agreement allows the NHS to pay more for medications while securing the tariff protection. Notably, it marks the first increase in NHS medicine costs in over two decades.
The deal follows US President Donald Trump’s previous warnings of potential tariff hikes on branded drug imports, which represent a significant UK export to the US. Business and Trade Secretary Peter Kyle emphasized that the arrangement safeguards approximately £5 billion in annual UK pharmaceutical exports, contributing to job protection and investment opportunities.
In the past year, the UK exported £11.1 billion worth of medicines to the US, which comprised 17.4% of its total goods exports. Pharmaceuticals had previously been exempt from the tariffs Trump announced earlier; concerns over reliance on overseas medications and the desire to bolster domestic manufacturing in the US have driven these discussions.
Under the new agreement, the UK government has committed to raising the price threshold for new treatments deemed too costly by 25%. Additionally, NHS spending on medications is targeted to increase from 0.3% to 0.6% of GDP within the next decade. The repayment rate for drug companies to the NHS will also be capped at 15%, down from over 20%.
The changes aim to address a rising tension in the UK regarding pharmaceutical costs and drug approval processes. There is uncertainty about how these shifts will impact NHS expenditures since pharmaceutical costs currently account for around 10% of its budget, with estimates suggesting a potential increase of £3 billion.
Additionally, this agreement marks the UK as the only country to secure a zero-percent tariff rate for pharmaceutical exports, amid concerns that other European countries might face higher tariffs. The arrangement comes after noticeable delays in pharmaceutical investments in the UK. Recent announcements from major pharmaceutical firms indicate a shift toward US-based investments, raising questions about the long-term impact on the UK’s pharmaceutical industry.
Source: https://www.bbc.com/news/articles/cn0k520v4xro?at_medium=RSS&at_campaign=rss