US and UK agree zero-tariffs on pharmaceuticals

The US has agreed to spare the UK from threatened trade tariffs on pharmaceutical products.

The announcement was made following months of uncertainty over whether exports from the UK, and elsewhere across Europe, would be subject to steep charges.

Via the policy update, the UK has become the only country in the world to secure a zero per cent tariff on pharmaceuticals exported to the US. Tariffs are taxes imposed on imports into a country.

In return, the UK has agreed to increase the baseline threshold used to assess if medicines can be used by the NHS.

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The National Institute for Health and Care Excellence (NICE) will increase the base threshold by 25%: from £20,000-£30,000 to £25,000-£35,000.

It means NICE will be able to approve medicines that deliver significant health improvements but might have been declined purely on cost-effectiveness grounds, the government said.

This ​​​​could include breakthrough cancer treatments, therapies for rare diseases, and innovative approaches to conditions that have long been difficult to treat, it added.

This will give NICE the opportunity to approve more new medicines and allow a greater number of patients to benefit from them, the Association of the British Pharmaceutical Industry (ABPI) said.

It pointed out that NICE's baseline cost-effectiveness threshold has not been increased for over 20 years.

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A US government statement said the UK will "reverse the decade-long trend of declining National Health Service (NHS) expenditures on innovative, life-saving medicines, and increase the net price it pays for new medicines by 25%".

US Trade Representative Jamieson Greer said the US "will work to ensure that UK citizens have access to latest pharmaceutical breakthroughs".

The background

US President Donald Trump has long complained that Europe does not pay enough for US drugs.

America and the UK agreed in May to seek a deal on the proviso that firms secured a better operating environment in Britain.

Criticism includes the concern that firms lose out on revenue due to a pricing regime which prioritises low costs for the NHS over incentives to invest.

In October, the science minister Patrick Vallance told MPs, as talks with the US continued, that many drugs available in the UK would see an "inevitable" price increase.

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