The UK and the US have agreed a deal to keep tariffs on UK pharmaceutical shipments into America at zero.<\/p>\n
Under the agreement the UK will pay more for medicines through the NHS in return for a guarantee that US import taxes on pharmaceuticals made in the UK will remain at zero for three years.<\/p>\n
The deal comes after US President Donald Trump threatened to raise tariffs to as high as 100%<\/a> on branded drug imports.<\/p>\n Pharmaceuticals are one of the UK’s biggest exports to the US, which is also the biggest market by far for big UK drugmakers including GSK and AstraZeneca.<\/p>\n Earlier this year, US president Donald Trump announced massive increases to taxes on goods imported to the country, which he argued would create jobs and boost American manufacturing.<\/p>\n The White House exempted pharmaceuticals from that round of tariffs, and later signed a deal with the UK to remove some trade barriers between the countries and reduce levies on most goods exported to the US to 10%. But pharmaceuticals remained a big unknown.<\/p>\n The White House has repeatedly threatened to raise tariffs on medicines, citing concerns about the country’s reliance on medicines made overseas. <\/p>\n Trump has also argued that US consumers effectively subsidise medicines for other developed countries by paying premium prices for those drugs, pushing for other countries to pay more. <\/p>\n Under the terms of the proposed agreement, the UK will increase the price threshold at which it deems new treatments to be too expensive by 25%.<\/p>\n The UK will also increase the overall amount the NHS spends on medicines, with a target to increase that spending from 0.3% of GDP to 0.6% of GDP over the next 10 years.<\/p>\n The amount drug companies must pay back to the NHS to ensure the health system does not overspend its allocated budget will be capped at 15% – last year, drug companies had to pay back more than 20%.<\/p>\n In exchange, UK medicine exports will be protected from tariff increases for the next three years.<\/p>\n Business and Trade Secretary Peter Kyle said the deal “guarantees that UK pharmaceutical exports \u2013 worth at least \u00a35bn a year – will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences.”<\/p>\n In the 12 months to the end of September, the UK exported \u00a311.1bn worth of medicines to the US, making up 17.4% of all goods exports in that period, according to the Department for Business and Trade.<\/p>\n The pressure from the US had intensified a long-running row between the industry and UK government over spending levels and approval rates.<\/p>\n Health Secretary Wes Streeting said in August that he was not prepared to let drug companies “rip off” the UK<\/a>, after talks between the government and pharmaceutical firms over the cost of medicines broke down.<\/p>\n But subsequently Science Minister Sir Patrick Vallance told the BBC<\/a> he accepted that the NHS needed to spend more on medicines after seeing its spending on drugs shrink as a percentage of its budget over the last 10 years.<\/p>\n Meanwhile, several large pharma investments in the UK have been paused or cancelled over the last 18 months while both GSK and AstraZeneca have recently announced multi-billion-dollar investments in the US.<\/p>\n In mid-September, British pharmaceutical giant GSK pledged to invest $30bn (\u00a322bn)<\/a> in research and manufacturing in the US over the next five years.<\/p>\n A week before GSK’s US investment announcement, US pharmaceutical company Merck – which is called MSD in Europe \u2013 revealed it was scrapping its planned \u00a31bn expansion<\/a> of its UK operations.<\/p>\n