NHS Faces Additional £1 Billion Drug Cost Due to New US Trade Deal
The National Health Service (NHS) in the UK will not receive additional funding from the Treasury to cover the increased costs of medicines resulting from a new trade deal with the United States. This has raised concerns among health leaders and politicians about how the NHS will manage these extra expenses without compromising frontline services.
Number 10, the official residence of the Prime Minister, admitted that medicines will cost taxpayers an additional £1 billion over the next three years. However, they have not yet provided a clear plan on how this money will be sourced. The Prime Minister’s spokesman stated that the Department of Health and Social Care will need to find the necessary funds from the budget allocated during June’s spending review.
Despite this, the government insists that there will be no cuts to frontline NHS services. Instead, they suggest that backroom functions or other parts of the department’s work may need to be scaled back to accommodate the increased costs.
The Impact of the New Trade Deal
The government announced that the NHS will pay more for its drugs as part of a deal with former President Donald Trump to avoid US tariffs on UK pharmaceutical exports. Ministers claim that the new trade deal will encourage investment in the UK and provide patients with faster access to “cutting-edge” medicines.
However, health leaders have warned that the NHS cannot afford to cover the higher bill from existing budgets without cutting frontline services. They have urged the Treasury to fully fund the deal to prevent any negative impact on patient care.
As part of the agreement, the government has agreed to increase the upper threshold for which it can buy new medicines by 25 per cent. This means that new medicines that might have previously been rejected by the drugs watchdog, NICE, for not being cost-effective could now be approved. Examples include breakthrough cancer treatments and therapies for rare diseases.
Financial Implications and Funding Concerns
The Prime Minister’s official spokesman said the deal will be funded by allocations made during the spending review. He emphasized that frontline services will remain protected through the record funding secured. Future years’ funding will be determined at the next spending review.
He added that the costs will start small but will increase over time as NICE approves more life-improving and life-saving medicines. Total costs over the spending review period are expected to be around £1 billion, but the final costs depend on which medicines NICE decides to approve and the uptake of these medicines.
The agreement also includes lowering repayment rates on NHS drug spending to 15 per cent from 2026. This is the amount that drug companies pay back to the NHS to ensure it does not overspend its allocated budget for branded medicines.
In exchange, US taxes on medicines and treatments imported from the UK will remain at 0 per cent for three years, according to the UK government.
Health Secretary Wes Streeting told MPs in the Commons: “For the avoidance of any doubt, while some of the costs are unpredictable because of the complexity of how medicines pricing is done, of course, we will not cut NHS budgets to fund the pharma deal.”
Political and Industry Reactions
Liberal Democrat MP Helen Morgan, the party’s health spokesperson, expressed concern about whether frontline NHS services will be affected. She noted that while the briefing suggests the costs will come from the NHS budget, the Secretary of State at the dispatch box indicated otherwise. She called for a clearer statement from the government.
The UK-US agreement comes after warnings that US pharmaceutical firms would shut down their sites in the UK if the NHS does not pay more for drugs. This would have had a major impact on jobs, economic growth, and research.
The Trump administration criticized European countries for “freeloading” on American innovation while paying far less for the resulting drugs. Earlier this month, US ambassador Warren Stephens warned that further American businesses would stop investing in the UK if changes were not made quickly.
This situation has led to the cancellation or pause of investments by US-based Merck and AstraZeneca in the UK in recent months.
Dr Layla McCay, director of policy at the NHS Confederation, which represents healthcare organizations, said: “Health leaders recognize the many benefits of the deal, but just one week after the Budget, they will be wondering what other unfunded cost pressures the health system may be expected to absorb and how that might impact on other aspects of patient care.”
She also highlighted the financial strain caused by recent resident doctor strikes, which have cost the NHS a staggering £300 million. Another round of strikes is planned in the run-up to Christmas, raising concerns about the sustainability of the current system.
Ongoing Questions and Concerns
As the NHS faces potential additional costs, several questions remain unanswered:
- Is the NHS prepared for a staggering £20 billion drug bill hike amidst Trump’s looming tariffs?
- Will soaring NHS costs increase by billions as Trump and the UK strike a sensational drug deal?
- Is the UK being forced to pay higher drug prices to benefit US pharmaceutical giants under Trump’s controversial demands?
- Could Trump’s aggressive demand for lower drug prices force the NHS to cover the bill with higher costs?
- Has Keir Starmer compromised the NHS with this US trade deal, potentially costing billions in higher drug prices?