Ministers are preparing to raise the amount the NHS pays for medicines by up to 25%, aiming to end a standoff with the pharmaceutical industry that has been exacerbated by pressure from the Trump administration. The move includes a potential increase in the cost-effectiveness threshold used by the National Institute for Health and Care Excellence (Nice), which has remained unchanged since 1999.
The Department of Health and Social Care is locked in discussions with the Treasury and No 10 over funding, with Downing Street resisting new budget commitments. The Liberal Democrats have criticised the plan, questioning its cost and potential cuts elsewhere in the NHS. Science Secretary Patrick Vallance acknowledged that UK drug spending, at 9% of total NHS expenditure, lags behind the US and Europe.
Industry body the Association of the British Pharmaceutical Industry has called for an immediate rise in the Nice threshold to between £40,000 and £50,000 per quality-adjusted life year, indexed to inflation. This would increase the share of the NHS budget for medicines. Health Secretary Wes Streeting proposed a deal saving the industry £1bn over three years, but firms argue they face £13.5bn in repayments under current agreements.
The row has been cited as a reason for recent investment pauses by MSD and AstraZeneca. Meanwhile, US President Donald Trump has threatened 100% tariffs on drug imports, accusing other nations of freeloading. In response, Pfizer and others have cut US prices and reduced middlemen costs; Pfizer secured a three-year tariff reprieve after cutting prices by up to 85%.
Last week, Sir Keir Starmer's business adviser Varun Chandra traveled to Washington for talks with US officials and drug companies. A UK government spokesperson confirmed efforts to secure a partnership on pharmaceutical exports while improving conditions for investment.
