The NHS could pay an additional 25% for drugs under a plan to end the dispute with drugmakers and Trump | Pharmaceutical industry
Ministers are preparing to raise the amount the NHS pays pharmaceutical companies for medicines by up to 25% after weeks of intense talks with Donald Trump’s administration and pharmaceutical companies.
Labor has set out new proposals to end the standoff with industry over drug pricing, including changing the cost-effectiveness thresholds by which new drugs are assessed for use in the NHS, according to industry sources.
The row has been cited as one of the reasons why major companies in the sector, including MSD (known as Merck in the US) and AstraZeneca, have canceled or paused investments in the UK in recent weeks, with investments in the US increasing.
The Department of Health and Social Care is in a standoff with the Treasury and No 10 over how to fund the deal, with Downing Street resisting pressure to allocate new money for medicines in next month’s Budget.
The move, first reported by Politico, was immediately criticized by Liberal Democrats, questioning the cost and whether it would lead to cuts elsewhere in the NHS.
Science Secretary Patrick Vallance has publicly acknowledged that UK spending on new medicines needs to rise from 9% of total NHS spending, which is lower than spending on medicines in the US and many other European countries.
A key element of the plan is believed to include raising the National Institute for Health and Care Excellence’s (NICE) cost-effectiveness threshold by 25%, which has not changed since 1999. Under current rules, NICE estimates that the cost of the drug ranges between £20,000 and £30,000 For every extra year of good quality life, it provides the patient with good value for money for the NHS.
Association of the British Pharmaceutical Industry on Tuesday She repeated her invitation For “urgent action” on drug pricing, saying the NICE threshold should be increased as soon as possible in line with inflation to between £40,000 and £50,000, and then linked to the index. Making this change will, over time, result in a greater share of the NHS budget being allocated to medicines, and additional funding will be needed to support this.
In talks over the summer, Wes Streeting, the health secretary, proposed a deal that would save the pharmaceutical industry £1bn over three years, with billions more promised over the next decade.
But the industry said it was expected to pay repayments totaling £13.5bn over the same period, and was demanding an additional £2.5bn a year.
A government source said ministers were prepared to spend more on medicines as they were becoming increasingly more innovative and preventive. They cited the example of weight-loss injections – which are expected to save the NHS billions of pounds in treating obesity and associated health problems – and trials of preventive cancer vaccines.
Patient-led campaign group Treat Only described it as “deeply disturbing news for patients and the NHS”, adding: “We are at risk of importing America’s catastrophic drug pricing crisis.” She called on the government to “take steps to create a system for developing and manufacturing medicines that puts patients first.”
the The NHS spent £20.6 billion on medicines and medical devices in 2023-24, up from £19.2 billion the previous year.
Trump has put pressure on pharmaceutical companies to reduce drug prices in the United States and increase them elsewhere, accusing other countries of exploiting high prices in the United States. Nearly two weeks ago, he threatened to impose 100% tariffs on drug imports from October 1 to add pressure, although that has not materialized.
In response to pressure from Trump, Pfizer and several other US and European companies, including AstraZeneca, the UK’s largest drugmaker, have begun lowering their US prices and selling directly to patients to cut out costly middlemen.
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In exchange for cutting its prices by up to 85%, Pfizer last week won a three-year tariff exemption, which was seen as groundbreaking for the rest of the sector.
Last week, Varun Chandra, Starmer’s chief business adviser, traveled to Washington, D.C., for talks with senior US officials and pharmaceutical companies, the latest in a series of visits to try to reach an agreement on pricing and tariffs.
A UK Government spokesman said: “We have secured a historic economic partnership with the US which includes working together on pharmaceutical exports from the UK while improving conditions for pharmaceutical companies here.
“We are now in advanced discussions with the US administration to ensure the best outcomes for the UK, reflecting our strong relationship and the opportunities from a close partnership with our pharmaceutical industry.”
However, the Lib Dems’ health and social care spokeswoman, Helen Morgan, said: “It is unbelievable that the government is bowing down to a bully US president after he told patients for years that new life-saving medicines were unaffordable.
“Ministers should make clear how much the move will cost and whether it will be funded by cuts elsewhere in the NHS. They should also put their plans before Parliament without delay so they can be properly scrutinized. It increasingly looks as if this government is putting Trump’s whims before everything else – even our precious NHS.”
Pharmaceutical sector negotiations with the UK government over the pricing of medicines under a voluntary scheme broke down without reaching an agreement in late August. Since then, MSD has abandoned its plans to set up a £1bn research center in London, and New York-based AstraZeneca and Eli Lilly have paused their projects, bringing the total of suspended or canceled drug investments to nearly £2bn since the start of this year.
“We are relieved to see a marked change in sentiment and language since August,” one industry source said.