We have caved in to bullying from President Trump. It will put NHS budgets under even more pressure. And the Green leader Zack Polanski will probably start claiming on X that the entire health service will be sold off to American conglomerates. There will be plenty of critics of the deal between the UK and the US on pharmaceutical tariffs. But they ignore a simple point: it is a great deal for one of the country’s most important industries.
Finally, the UK will now have a key competitive advantage over the EU
President Trump is planning to impose punitive 100 per cent tariffs on medicines imported into the US, both to encourage domestic manufacturing, and to try to force prices lower. For the UK industry, that was a huge threat. Exports to America are worth an estimated £11 billion a year to the industry, and huge investments in R&D are dependent on access to the world’s largest medical market. A deal has now been struck that will cut British tariffs to zero. Sure, the UK has made concessions. The NHS will pay an estimated £3 billion more for drugs. But in return we will have full access to US consumers.
In reality, that is a good deal. Why? Well, to start with, President Trump had a point. The NHS by international standards was paying too little for its medicines, undermining the British industry. The UK spends about 9 per cent of its health budget on medicines, compared to 15 per cent or more in France and Germany. Sure, an extra £3 billion is a lot of money, but within the vast NHS budget, hitting £215 billion this year, it is surely a drop in the ocean? Next, life sciences is one of the few industries where the UK is a genuine global leader. There were worrying signs that the industry was starting to decline, with Merck scrapping a £1 billion R&D lab in London and AstraZeneca postponing investments in Cambridge and Liverpool. Once companies start to wind down investment in a country that can very quickly accelerate, and the entire industry is very clearly under threat. It needed some help, and this will make a big difference.
Finally, the UK will now have a key competitive advantage over the EU. Ireland, with vast pharma exports to the US, will be looking at this deal nervously, and so will Germany and France. The UK is now one of the best places in the world to manufacture medicines, with tariff free access to both the American and European markets. It might mean writing a ten-figure cheque. But that is a price well worth paying to secure the future of one of the country’s major industries.
Comments