The
Trump
administration’s
position
on
drug
prices
is
that
Americans
pay
too
much
while
other
countries
don’t
pay
nearly
enough.
A
new
trade
deal
with
the
United
Kingdom
is
addressing
that
imbalance,
raising
prices
the
national
health
system
will
pay
for
new
medicines
in
exchange
for
tariff
exemptions
on
U.K.
pharmaceutical
exports
valued
at
about
$3.5
billion
a
year.
The
deal
announced
Monday
is
an
update
to
a
broad
trade
deal
the
U.S.
struck
with
the
U.K.
in
May.
While
the
countries
describe
this
new
deal
as
an
“agreement
in
principle,”
it
sets
a
precedent
that
could
shape
pharmaceutical
pacts
the
Trump
administration
is
still
pursuing
with
other
countries.
Before
the
U.K.’s
National
Health
Service
(NHS)
can
use
a
new
medicine,
it
must
first
be
evaluated
by
the
government’s
National
Institute
for
Health
and
Care
Excellence
(NICE),
which
assesses
a
drug’s
cost
effectiveness
to
the
health
service.
NICE’s
current
cost
effectiveness
benchmark
is
a
range
of
£20,000
to
£30,000
(about
$26,412
to
$39,618)
per
quality
adjusted
life
year.
That
means
a
cost-effective
drug
should
lead
to
the
equivalent
of
one
additional
year
of
health
and
improved
quality
of
life
for
no
greater
than
£20,000
to
£30,000
more
than
the
cost
of
the
current
standard
of
care.
Consequently,
a
drug
shown
to
be
safe
and
therapeutically
effective
in
clinical
trials
may
end
up
being
turned
down
by
NICE
because
it
is
not
cost
effective,
though
the
agency
said
it
applies
a
higher
threshold
for
medicines
developed
for
ultra-rare
conditions.
The
new
agreement
boosts
the
cost-effectiveness
standard
by
25%,
raising
it
to
£25,000
to
£35,000.
It’s
the
first
major
increase
in
this
threshold
in
more
than
20
years,
the
U.K.
government
said
in
its
own
announcement
of
the
deal.
NICE
said
it
approves
about
91%
of
the
drugs
it
evaluates,
amounting
to
about
70
new
drugs
annually.
The
agency
calculates
that
the
threshold
could
lead
to
three
to
five
additional
approvals
each
year.
NICE
expects
this
new
standard
will
take
effect
this
coming
April.
The
U.K.
government
frames
the
higher
threshold
as
a
way
to
improve
access
to
innovative
new
treatments
that
might
otherwise
have
fallen
short
in
NICE’s
evaluation.
These
products
include
drugs
for
cancers
and
rare
diseases.
The
government
also
says
this
deal
will
encourage
global
pharmaceutical
companies
to
prioritize
the
U.K.
for
early
launches
of
new
medicines,
which
could
make
British
patients
among
the
first
in
the
world
to
access
new
treatments.
The
Trump
administration
has
ongoing
investigations
under
Section
232
of
the
Trade
Expansion
Act,
which
could
support
the
imposition
of
tariffs
on
the
basis
of
national
security.
These
tariffs
could
be
imposed
on
particular
sectors,
such
as
pharmaceuticals.
The
U.K.
government
estimates
that
the
country’s
annual
pharmaceutical
exports
are
valued
at
more
than
£5
billion
(about
$3.5
billion).
The
new
agreement
exempts
U.K.-produced
drugs
from
potential
Section
232
tariffs
for
the
remainder
of
President
Trump’s
term
in
office.
This
exemption
includes
pharmaceutical
ingredients
and
medical
technology.
The
agreement
also
spares
U.K.-produced
drugs
from
Section
301
tariffs,
which
could
be
imposed
if
an
investigation
finds
unfair
trade
practices.
This
exemption
also
extends
for
the
remainder
of
Trump’s
term.
In
the
past
year,
many
pharmaceutical
companies
have
increased
their
U.S.
drug
manufacturing
capabilities
as
a
way
to
avoid
potential
tariffs
on
drugs
and
pharmaceutical
ingredients
made
overseas.
In
some
cases,
the
U.S.
construction
plans
appear
to
be
coming
at
the
expense
of
capital
investments
in
countries
such
as
the
U.K.
For
example,
in
recent
months,
Merck
has
canceled
plans
for
a
London
research
center
while
AstraZeneca
paused
plans
for
a
research
site
in
Cambridge,
England,
even
as
both
companies
ramp
up
investment
in
manufacturing
and
research
infrastructure
throughout
the
U.S.
The
new
agreement
could
restore
U.K.
competitiveness
in
the
global
life
sciences
supply
chain,
Jon
Roffman,
principal,
pharmaceuticals
&
biotech
at
consultancy
ZS,
said
in
an
email.
Zero
tariffs
encourage
pharma
firms
to
maintain
or
even
increase
their
R&D
spending
in
the
U.K.
While
the
U.K.
frames
the
deal
as
increasing
access
to
medicines
for
its
citizens,
it
could
also
accelerate
delivery
of
novel
therapies
to
patients
in
the
U.S.
“Faster,
lower-cost
cross-border
movement
of
medicines
reduces
logistical
friction
and
opens
the
door
for
smoother
launches
of
innovative
treatments,
especially
novel
or
high-value
therapies
that
rely
on
stable
supply
networks,”
Roffman
said.
In
a
prepared
statement,
U.S.
Trade
Representative
Jamieson
Greer
said
the
U.S.
agreement
with
the
U.K.
will
help
drive
investment
and
innovation
in
both
countries.
He
added
that
the
Trump
Administration
is
reviewing
the
pharmaceutical
pricing
practices
of
many
other
U.S.
trading
partners
and
“hopes
that
they
will
follow
suit
with
constructive
negotiations.”
Photo:
Jason
Alden/Bloomberg,
via
Getty
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