Ministers are reportedly considering increasing the payments the NHS makes to pharmaceutical companies for medications by as much as 25%. This follows extensive discussions involving the Trump administration and various drug manufacturers. In response to ongoing tensions regarding pricing, Labour has proposed changes to the cost-effectiveness thresholds used by the NHS to evaluate new drugs.
This standoff has been implicated in recent decisions by major pharmaceutical companies, such as Merck and AstraZeneca, to suspend or cancel investments in the UK, while they are increasing their investments in the US. The Department of Health and Social Care is facing challenges in reaching an agreement with the Treasury and No 10 regarding funding for this potential new arrangement, particularly with Downing Street hesitant to allocate new funds in the upcoming budget.
The Liberal Democrats expressed concern about the implications of this price increase, questioning how it might affect NHS funding. The science secretary has acknowledged that UK spending on new medications should increase, as the current rate is below that of the US and many European countries. The proposed plan includes raising the National Institute for Health and Care Excellence (NICE) cost-effectiveness threshold, which has not changed since 1999.
The Association of the British Pharmaceutical Industry has urged a swift increase to the NICE threshold to match inflation, proposing a range between £40,000 and £50,000 per additional year of quality life for treatments. In earlier talks, the health secretary suggested a plan to save the pharmaceutical industry £1 billion over three years, but companies maintain they seek an additional £2.5 billion annually in funding.
Additionally, factors such as the recent advocacy from US pharmaceutical companies for price reductions in the US, amidst allegations from Trump regarding international drug pricing practices, have influenced the discussions. The UK government emphasized its commitment to securing beneficial economic partnerships with the US, while calls for transparency and scrutiny of these potential changes have been made by opposition representatives.
Source: https://www.theguardian.com/business/2025/oct/08/nhs-could-pay-25-more-for-medicines-under-plan-to-end-row-with-drugmakers-and-trump