UK ministers preparing to raise payments to end standoff with pharma industry, cited as reason for firms axing British investments<\/p>\n\n\n\n
Ministers are preparing to raise the amount the NHS pays pharmaceutical firms for medicines by up to 25% after weeks of intensive talks with the Donald Trump administration<\/a> and drugmakers.<\/p>\n\n\n\n Labour has drawn up fresh proposals to end a standoff with the industry over drug pricing<\/a>, including changing the cost-effectiveness thresholds under which new medications are assessed for use on the NHS, according to industry sources.<\/p>\n\n\n\n The row has been cited as one of the reasons why big companies in the sector, including MSD (known as Merck in the US) and AstraZeneca, have cancelled or paused investments in the UK<\/a> in recent weeks, while ramping up investments in the US.<\/p>\n\n\n\n The Department of Health<\/a> and Social Care is in a standoff with the Treasury and No 10 on how to fund the deal, with Downing Street resisting pressure to commit new funds for medicines in next month\u2019s budget.<\/p>\n\n\n\n The Liberal Democrats immediately criticised the move, first reported by Politico, asking how much it would cost and whether it would lead to cuts elsewhere in the NHS<\/a>.<\/p>\n\n\n\n The science secretary, Patrick Vallance, has publicly acknowledged<\/a> that the UK\u2019s spending on new medicines needs to rise from 9% of overall NHS spend, which is below drug spending in the US and many other European countries.<\/p>\n\n\n\n The main element of the plan is thought to include raising the National Institute for Health and Care Excellence (Nice) cost-effectiveness threshold by 25%, which has been unchanged since 1999. Under current rules, Nice considers a medicine costing between \u00a320,000 and \u00a330,000<\/a> for every extra year of good-quality life it provides a patient to represent good value for money for the NHS.<\/p>\n\n\n\n The Association of the British Pharmaceutical Industry on Tuesday reiterated its call<\/a> for \u201curgent action\u201d on drug pricing, saying the Nice threshold should be increased as soon as possible in line with inflation to between \u00a340,000 and \u00a350,000, and index-linked thereafter. Making this change would, over time, lead to a greater share of the NHS budget being allocated to medicines, and additional funding would be needed to support this.<\/p>\n\n\n\n In talks over the summer, Wes Streeting, the health secretary, proposed a deal that would save the pharmaceutical industry \u00a31bn over three years, with billions more promised over the coming decade.<\/p>\n\n\n\n But the industry argued that it was forecast to make repayments totalling \u00a313.5bn over the same period and has been demanding about \u00a32.5bn a year extra.<\/p>\n\n\n\n A government source said ministers were prepared to spend more on medicines as they increasingly became more \u200binnovative and preventive. They cited the example of weight loss injections \u2013 which are forecast to save the NHS billions of pounds in treating obesity and associated health problems \u2013 and trials for cancer-preventing vaccines.<\/p>\n\n\n\n The patient-led campaign group Just Treatment called it \u201cdeeply troubling news for patients and the NHS\u201d, adding: \u201cWe are at risk of importing America\u2019s disastrous drug pricing crisis.\u201d It called on the government to \u201ctake steps to establish a system for developing and manufacturing medicines that puts patients first\u201d.<\/p>\n\n\n\n The NHS spent \u00a320.6bn on medicines<\/a> and medical devices in 2023-24, up from \u00a319.2bn the year before.<\/p>\n\n\n\n Trump has put pressure on pharma companies to lower their drug prices in the US and increase them elsewhere, accusing other countries of \u201cfreeloading\u201d on high US prices. Nearly two weeks ago, he threatened to impose 100% tariffs on pharmaceutical imports from 1 October<\/a> to ramp up the pressure, although these did not materialise.<\/p>\n\n\n\n In response to pressure from Trump, Pfizer and several other US and European companies, including the UK\u2019s biggest drugmaker, AstraZeneca, have started to cut their prices in the US and to sell directly to patients to cut out costly middlemen.<\/p>\n\n\n\n In return for reducing its prices by up to 85%, Pfizer won a three-year reprieve from tariffs last week, which was seen as a bellwether for the rest of the sector.<\/p>\n\n\n\n Last week, Varun Chandra, Starmer\u2019s main business adviser, flew to Washington DC for talks with senior US officials and drug companies, the latest in a series of visits to try to hammer out a deal on pricing and tariffs.<\/p>\n\n\n\n A UK government spokesperson said: \u201cWe\u2019ve secured a landmark economic partnership with the US that includes working together on pharmaceutical exports from the UK whilst improving conditions for pharmaceutical companies here.<\/p>\n\n\n\n \u201cWe\u2019re now in advanced discussions with the US administration to secure the best outcome for the UK, reflecting our strong relationship and the opportunities from close partnership with our pharmaceutical industry.\u201d<\/p>\n\n\n\n However, the Lib Dem health and social care spokesperson, Helen Morgan, said: \u201cIt beggars belief that the government is bending to a bullying US president having told patients for years that life-saving new drugs are unaffordable.<\/p>\n\n\n\n \u201cMinisters must come clean about how much this move will cost and whether it will be funded by cuts elsewhere in the NHS. They should also lay their plans before parliament without delay so they can be properly scrutinised. It increasingly feels like this government puts the whims of Trump before everything else \u2013 even our precious NHS.\u201d<\/p>\n\n\n\n The pharma sector\u2019s negotiations with the UK government over drug pricing under a voluntary scheme broke down<\/a> without an agreement in late August. Since then, MSD has abandoned plans for a \u00a31bn research centre in London and AstraZeneca and New York-based Eli Lilly have paused projects, taking total pharma investments that are on hold or cancelled to nearly \u00a32bn<\/a> since the start of this year.<\/p>\n\n\n\n One industry source said: \u201cWe are relieved to see a recognisable change in sentiment and language from August.\u201d<\/p>\n\n\n\n