Washington: The Trump administration has convinced the United Kingdom to pay 25 per cent more for new pharmaceuticals in a trade deal that now serves as a model to compel other developed nations, such as Australia, to fork out more for drugs.
Under the deal, announced overnight, the UK’s National Health Service will increase the net price it pays for new medicines by 25 per cent, and certain rebates paid by drug companies to the NHS will be reduced.
In return, British medicines will be exempt from potentially triple digit US tariffs and any future trade practices investigations involving pharmaceuticals for the rest of President Donald Trump’s term.
It was not immediately clear whether British consumers could be forced to pay more as a result. But UK media reported the cost to the NHS would be about £3 billion ($6.1 billion).
A White House official, requesting anonymity, said the general structure of the deal – under which other countries pay more for drugs or face punitive trade measures by the US – was the model for global negotiations.
But the specifics, such as the 25 per cent rate or changes to the NHS rebate process, would not necessarily be a benchmark for other deals, they said.
“For decades, Americans have subsidised global pharmaceutical research and development by paying several times more for the same exact drugs than our peers in other wealthy nations do,” White House spokesman Kush Desai said in a statement.
“President Trump pledged to use every lever of executive power to put America First, and the administration’s pharmaceutical deal with the UK is a historic step towards ensuring that other developed countries finally pay their fair share.
“Americans are just 4 per cent of the world’s population, and we cannot – and will not – cover over 75 per cent of the costs of new drug development for the rest of the world.”
Without naming any countries, US Trade Representative Jamieson Greer indicated he was now looking to strike similar deals with other nations.
“The Trump administration is reviewing the pharmaceutical pricing practices of many other US trading partners and hopes that they will follow suit with constructive negotiations,” he said.
Greer’s office has been contacted for further comment.
Asked at a briefing on Tuesday (AEDT) whether there were any guarantees that the extra money taken in by US drug companies under the deal would be passed on to American consumers, White House press secretary Karoline Leavitt said: “I’ll get you the answer to that question after the briefing.”
Australian Treasurer Jim Chalmers has warned Australian pharmaceutical products – chiefly from biotech giant CSL – are more exposed to US tariffs than steel and aluminium, but that the Pharmaceutical Benefits Scheme was not a bargaining chip.
“We’re not willing to compromise the PBS. We’re not willing to negotiate or trade away what is a really important feature of the health system,” Chalmers has said.
Health Minister Mark Butler said in August: “America exports more pharmaceuticals to Australia than we do to them. They do it on a tariff-free basis, that’s served both of our countries very well, and we’ll continue to argue the case for a continuation of free trade in pharmaceuticals.”
The British government said the trade deal with the US would allow the NHS to approve innovative medicines that might have previously been declined purely on cost-effectiveness grounds, including breakthrough cancer treatments or therapies for rare diseases.
“This vital deal will ensure UK patients get the cutting-edge medicines they need sooner, and our world-leading UK firms keep developing the treatments that can change lives,” the UK Science Secretary Liz Kendall said.
Get a note directly from our foreign correspondents on what’s making headlines around the world. Sign up for our weekly What in the World newsletter.
Michael Koziol is the North America correspondent for The Age and Sydney Morning Herald. He is a former Sydney editor, Sun-Herald deputy editor and a federal political reporter in Canberra.Connect via Twitter or email.
