UK–US deal may push up NHS drug prices to avoid US pharma tariffs

The United Kingdom has struck a landmark agreement with the United States under which U.K.-origin medicines, pharmaceutical ingredients and medical technologies will be exempt from U.S. tariffs for the foreseeable future. In return the U.K. has committed to raise the prices paid by the National Health Service (NHS) for new and innovative drugs.

Under the deal the threshold used by the National Institute for Health and Care Excellence (NICE) to judge cost-effectiveness will increase by around 25 per cent, making it easier for high-cost treatments (including cutting-edge cancer or rare disease therapies) to be approved for NHS funding. At the same time the rebate scheme applied to branded medicines will be relaxed, reducing the clawback from drug companies.

This shift follows pressure from the U.S. to narrow the gap between American drug prices and the lower prices in countries such as the U.K. The trade-based manoeuvre was prompted by threats of steep U.S. tariffs on foreign pharmaceuticals. For U.K. drugmakers the agreement clears the way for continued exports to the U.S. without punitive tariffs. For patients and the NHS it may translate into higher costs for medicines, even as access to new treatments increases. The long-term impact on the NHS budget remains uncertain as the cost of medicines may rise by billions annually.