NHS could pay 25% more for medicines under plan to end row with drugmakers and Trump | Pharmaceuticals industry

Ministers are set to increase the amount the NHS pays pharmaceutical companies for drugs after weeks of intense talks with Donald Trump’s administration and drug manufacturers.

The government has set out new proposals to end a standoff with the industry on drug pricing, including changing the cost-effectiveness thresholds at which new drugs are assessed for use on the NHS, according to industry sources.

The order 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 while increasing investment in the US.

Downing Street’s push to introduce new funds for medicines in next month’s budget is resistant, with the Department of Health and the Treasury 10th on how the Deal will be financed.

Liberal Democrats were quick to attack the move, reported by POLITICO, asking how much it would cost and whether it would lead to cuts elsewhere in the NHS.

Science Secretary Patrick Vallance has publicly acknowledged that the UK’s spending on new medicines must rise from the 9% of overall NHS spending, which is below drug spending in the US and many other European countries.

The key element of the plan is thought to involve increasing the National Institute for Health and Care Excellence (NICE) cost-effectiveness threshold, which has remained unchanged since 1999, by 25%. Nice sees it as a drug costing between £20,000 and £30,000 For every extra year of quality life a patient delivers represents good value for money for the NHS.

British Pharmaceutical Industry Association on Tuesday he repeated his call For “urgent action” on drug pricing, he said the nice threshold should be increased to £40,000 to £50,000 as soon as possible, in line with inflation and then index-linked. Over time, this change will lead to a greater share of the NHS budget being allocated to medicines, with additional funding needed to support this.

In talks in 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 claimed it was forecast to make total repayments of £13.5bn over the same period, claiming around £2.5bn extra a year.

A government source said ministers were prepared to spend more on medicines as they became increasingly innovative and preventive. They cited the example of weight loss injections predicted to save the NHS billions of pounds in treating obesity and associated health problems, and trials for cancer prevention vaccines.

. NHS spent £20.6bn on medicines and medical devices in 2023-24, up from £19.2bn the year before.

Trump has pressured pharmaceutical companies to lower drug prices in the U.S. and raise them elsewhere, accusing other countries of “freeloading” on U.S. high prices. About two weeks ago he threatened to impose 100% tariffs on pharmaceutical imports from October 1 to increase pressure, although these have not materialized.

Trump, in response to pressure from Pfizer and several other US and European companies, including Britain’s largest drugmaker AstraZeneca, has begun slashing its prices in the US and selling directly to patients to cut out expensive middlemen.

In exchange for cutting its prices by up to 85%, Pfizer last week won a three-year reprieve from tariffs, seen as a bellwether for the rest of the industry.

Last week, Starmer’s main business adviser Varun Chandra flew to Washington DC to meet with senior US officials and pharmaceutical companies, the latest in a series of visits to hammer out a deal on pricing and tariffs.

A British government spokesman said: “We have secured a landmark economic partnership with the US, which includes working together on pharmaceutical exports from the UK and improving conditions for pharmaceutical companies here.

“We are now engaged in further discussions with the US administration to secure the best outcome for the UK, reflecting our strong relationship and the opportunities arising from close partnership with our pharmaceutical industry.”

However, Lib Dem Health and Social Care spokeswoman Helen Morgan said: “He believes the government is bent on bullying the US president over years of saying life-saving new medicines are inappropriate.

“Ministers must be clear on how much this move will cost and whether it can be funded by cuts elsewhere in the NHS. They must also put their plans before parliament without delay.

Pharma industry negotiations with the UK government over drug pricing under a voluntary scheme broke down without a deal in late August. Since then, MSD has abandoned plans for a £1bn research center in London and AstraZeneca, and New York-based Eli Lilly has paused projects, with its total pharmaceutical investments either on hold or canceled since the beginning of this year for around £2bn.

An industry source said: “We are relieved to see a recognizable change in sentiment and language from August.”