The UK government is preparing to raise the amount the NHS pays pharmaceutical firms for medicines by as much as 25%, in an effort to end a major standoff with the global drug industry and the Donald Trump administration.
The move comes amid fears that the dispute — over the price caps and cost-effectiveness thresholds for new treatments — has already driven companies such as MSD (Merck) and AstraZeneca to cancel or pause major investments in Britain.
According to reports, ministers are considering raising the National Institute for Health and Care Excellence (NICE) cost-effectiveness threshold, which has been unchanged since 1999. The current benchmark values a treatment as good value if it costs between £20,000 and £30,000 per extra year of good-quality life, but this could rise to around £40,000–£50,000.
Health Secretary Wes Streeting is said to have offered drugmakers a deal worth £1bn in savings over three years, with the potential for further incentives over the next decade.
The Department of Health, Treasury and No.10 are reportedly divided over how to fund the move, with Downing Street resisting pressure to commit new money for medicines in next month’s budget.
Critics — including patient advocacy group Just Treatment — warn the changes could import “America’s disastrous drug pricing crisis” into the UK. Meanwhile, the Liberal Democrats have accused the government of “bending to a bullying US president” and demanded full transparency on costs.
The NHS spent £20.6bn on medicines and medical devices in 2023–24 — up from £19.2bn the year before.
A government spokesperson said ministers were in “advanced discussions with the US administration” to ensure a deal that strengthens the UK pharmaceutical industry while safeguarding patient access to vital medicines.