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The UK government will increase NHS spending on medicines by 25 per cent by making drug approvals easier in order to secure a carve-out from import tariffs threatened by US President Donald Trump.
Ministers on Monday promised to overhaul NHS value-for-money rules in England in a push to boost pharmaceutical investment and avoid a 100 per cent levy on branded medicines from Washington, which has yet to be imposed on any country.
The measures include a 25 per cent rise in the health service’s medicines budget for branded medicines on the back of the first-ever increase to the threshold at which the NHS deems medicines value for money.
The UK will also reduce the clawback tax that pharmaceutical companies pay the NHS from 23 per cent to 15 per cent, in a concession to industry.
UK science secretary Liz Kendall said the deal would “enable and incentivise life sciences companies to continue to invest and innovate” in Britain, after a string of drugmakers including MSD, Eli Lilly and AstraZeneca paused or scrapped planned investments.
Jamieson Greer, US trade representative, confirmed the spending boost proposed by the UK would secure the country exemptions from steep tariffs threatened on drug imports.
Under the zero-tariff deal, which will initially last three years, NHS spending on medicines is forecast to rise from about 9.5 per cent of its budget to 12 per cent.
The move will cost taxpayers in Britain about £3bn once fully implemented, although UK officials said the initial cost would be lower.
The National Institute for Health and Care Excellence has since 1999 approved medicines that cost less than between £20,000 and £30,000 for each year of good-quality life they provide — a metric known as “quality-adjusted life year” (QALY).
The drug approval body’s thresholds will rise to £25,000-£35,000 alongside other technical changes to assessment methods that will increase medicines spending by 25 per cent.
But industry and government figures said drugmakers had failed in an attempt to ensure the QALY rises in line with inflation in future. The pharmaceutical industry has argued that an inflation-linked increase will take the threshold to between £40,000 and £50,000 a year.
Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry, a lobby group, described the deal as an “important step” towards ensuring patient access to innovative medicines.
“These commitments begin to address industry concerns on NHS access to medicines, and the UK’s record-high and unpredictable payment rate,” he said.
Ministers have been battling for weeks over how to fund the changes, with health secretary Wes Streeting resisting pressure from chancellor Rachel Reeves for the money to come from health service budgets.
Meanwhile, the Trump administration has railed against European countries “freeloading” on American innovation while the US pays much higher drug prices, as it battles to lower the cost of living for Americans.
Greer said: “For too long, American patients have been forced to subsidise prescription drugs and biologics in other developed countries by paying a significant premium for the same products in ours.”
Under the deal, the UK will cut the sales tax paid by drugmakers to the NHS from next year from 23 per cent to 15 per cent.
The voluntary scheme for branded medicines pricing, access and growth levy was forecast by government and pharmaceutical groups to stand at 15 per cent when it was agreed two years ago, and has been the subject of acrimonious talks.
Chris Boerner, chief executive of Bristol Myers Squibb, said the deal meant the US drugmaker anticipated “being able to invest upwards of $500mn over the next five years”.
“This agreement is a sign of progress and one that creates an environment conducive to our continued presence in the UK,” he added.
Nice’s thresholds are based on the theory that higher drugs costs could do more harm than good by diverting funds from other areas that could be more cost-effective, such as medical staff or equipment.
Sam Roberts, chief executive of the arm’s-length body, said that “in a health service funded through general taxation, it is right that government decides on the level of health spend”.
Last month she warned against raising QALY in line with inflation because of budgetary constraints, saying there were “only so many taxpayer pounds”.
