The UK has agreed to pay 25% more for new drugs by 2035 as part of the US-UK drug pricing agreement, which is estimated to cost an extra £3 billion a year.
The transatlantic agreement also sees NHS England, which currently spends £14.4 billion a year on innovative treatments, doubling the percentage of GDP it devotes to purchasing such products from 0.3% to 0.6% over the next decade.
But ministers have been accused of caving in to US demands to spend billions of extra pounds a year on US-supplied drugs. National Health Service after pressure from Donald Trump.
The Liberal Democrats have called the deal a “Trump shake-out of the NHS”.
Helen Morgan, the party's health spokeswoman, said: “Trump demanded higher wages to put Americans first, and our government shut down. Patients stuck in crowded hospital hallways or unable to call an ambulance will not forget this.”
NHS chiefs have backed the Government's assessment that the “landmark” agreement will prove beneficial as it will result in tens of thousands of patients receiving innovative new medicines.
But they also warned that the NHS receives too little funding to cover the costs involved and that budgets for care, services and treatment should not be raided.
“It is not yet clear how it will be paid for. There is absolutely no deviation from the current published NHS spending plans for this important commitment and this is a major concern for trust leaders,” said Daniel Elkeles, chief executive of hospital group NHS Providers.
Dr Andrew Hill, a pharmaceutical industry expert at the University of Liverpool, said the deal would see the NHS pay more money for the same amount of treatment. “Wes Streeting, the health secretary, agreed to give pharmaceutical companies 25% more for the same drugs we were already buying. NHS funding is tight, so if we have to pay higher prices for drugs, it means less money for doctors, nurses and ambulances. [and] simple procedures that can save lives cheaply using low-cost generic drugs,” he said.
Ministers said the “major” deal would also help boost the pharmaceutical industry in the UK, which has recently suspended or scrapped several major planned investments in protest at the government's approach to drug pricing.
They also welcomed the fact that £6.6bn a year on UK-made drugs exported to the US will now be able to avoid, at least for the next three years, the hugely punitive 100% tariffs Trump has threatened on drugs made outside America. He has promised to lower America's drug costs, which are the highest in the world, and force countries to pay more for drugs made in the United States.
As part of the deal, the National Institute for Health and Care Excellence (Nice) will increase the amount the NHS is willing to spend on potentially life-extending drugs from £20,000 to £30,000 per year of life gained to £25,000 to £35,000 – the first increase to the watchdog's quality-adjusted life-year formula since its inception in 1999.
The change should allow Nice to approve three to five additional drugs a year, beyond the 70 generally considered good value for money. These are likely to include newly developed treatments for cancer and rare diseases for which costs currently exceed thresholds.
Whitehall sources disputed the Lib Dem's claim that ministers had caved in in the face of US pressure.
“Unlike when the Lib Dems defected to Andrew Lansley. [over the NHS reorganisation in 2010-12]we protected the NHS. This will not be paid for out of the NHS services budget,” Deputy Streeting said.
Sources claimed the NHS received hundreds of millions of pounds in a comprehensive spending review earlier this year to cover the costs of the deal in its early years, meaning the service would not have to cut spending elsewhere to pay for innovative drugs.
However, they acknowledged that costs will rise in the coming years and the issue of who pays will need to be addressed at the next spending review.
“The deal is an important step towards ensuring patients have access to the innovative medicines needed to improve wider NHS health outcomes,” said Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry.
Most pharmaceuticals have been exempt from trade tariffs under World Trade Organization rules since 1994, but Trump turned a blind eye to the agreement earlier this year as part of an attempt to repatriate drug production and innovation to the United States from countries such as Ireland, which he says stole the US pharmaceutical sector.
The deal will also make changes to the long-standing drug procurement agreement with the NHS, which industry leaders say is uncompetitive, discourages investment and requires reform.
The deal will take place six months after the initial tariff. agreement negotiated by Starmer and Trumpwho promised “preferential treatment” for the UK pharmaceutical industry.
Pressure on the UK to reform its NHS procurement system has increased in recent months. Merck And AstraZeneca suspending or canceling investments in the UK, citing the economic climate and lack of support for the life sciences industry.
Last month, US Ambassador to Britain Warren Stevens said further businesses would cut future investment unless “changes are made quickly”.
At the heart of the new UK-US deal is an agreement to reduce the so-called “rebate” in drug payment agreements between pharmaceutical companies and the National Health Service.
Under the current scheme, pharmaceutical companies are required to pay the NHS between 23.5% and 35.6% of revenues from sales of branded drugs if the amount used by the public health service exceeds the agreed rate.
This rate will be reduced to 15% under a new discount in the existing voluntary scheme for pricing and access to branded medicines.
This ensures that reduced prices on brand-name drugs will continue if demand exceeds the annual limit.
Similar schemes exist in other European countries, but average rates are much lower, ranging from 9% in Ireland to 7% in Germany.
The talks were led by Varun Chandra, the Prime Minister's chief business adviser, and Patrick Vallance, the science minister and former GSK head of research and development.
