The cost of the UK’s controversial NHS drug pricing deal with the US administration under Donald Trump will be paid from the NHS budget rather than central Treasury funds, raising fears that frontline services could be squeezed as medicines costs rise sharply over the next decade.
Science minister Patrick Vallance has confirmed that the financial burden of the agreement will fall on the Department of Health and Social Care, which funds NHS England. In a letter to the Commons science, innovation and technology committee, Vallance said the deal would initially cost an extra £1bn over the next three years, paid directly from existing health budgets.
This is the first time ministers have explicitly stated which department will absorb the cost, ending months of uncertainty over whether the Treasury would underwrite the agreement.
Long-term costs could reach £9bn a year
Campaigners and opposition MPs warn that the NHS drug pricing deal could become far more expensive over time. While the government’s estimate covers only the remaining years of the current spending review, critics say the full 10-year agreement could push annual medicines spending up by as much as £9bn by 2035.
The deal commits the UK to doubling total spending on medicines from 0.3% to 0.6% of GDP by the end of the agreement. Ministers have yet to publish detailed long-term cost projections, prompting accusations that the true financial impact is being downplayed.
Political backlash over NHS funding risks
The agreement has triggered concern across Parliament, including among Labour, Liberal Democrat, Green and SNP MPs, who argue that higher drug prices risk forcing NHS trusts to cut services elsewhere. The Liberal Democrats have branded the agreement a “Trump shakedown of the NHS”, accusing Prime Minister Keir Starmer of signing off the deal to maintain favourable relations with Washington.
The higher prices apply only to newly developed branded medicines, not to generic drugs, which account for most of the NHS’s roughly £20bn annual medicines bill. However, critics say innovation-heavy areas such as cancer and rare disease treatments could be hit hardest.
NHS leaders warn of tough choices ahead
Health sector leaders say the decision to fund the deal from within existing NHS budgets will alarm managers already struggling with deficits, staff shortages and record waiting lists.
Dr Layla McCay of the NHS Confederation and NHS Providers said trust leaders would be deeply concerned that Department of Health and Social Care budgets are being used to absorb higher medicines costs in an already “extremely challenging” financial environment. She warned it remains unclear which planned spending will be cut to cover the extra pressure.
Ministers insist services will be protected
Vallance has sought to reassure MPs that frontline NHS services will remain protected, arguing that the additional medicines spending will be covered by allocations agreed at the spending review. He said NHS England, the Department of Health and Social Care and National Institute for Health and Care Excellence had carried out joint modelling to assess the impact.
However, campaigners argue that without transparency on the full long-term costs, Parliament and the public cannot judge whether the deal represents value for money for UK patients.
Background to the drug pricing agreement
The agreement, announced in December, was presented by ministers as a way to secure faster access to innovative medicines and strengthen the UK’s life sciences sector after Brexit. Similar pricing pressures have been seen in the US, where drug costs are significantly higher than in the UK due to weaker price controls.
As scrutiny intensifies, MPs are demanding clearer guarantees that the NHS drug pricing deal will not undermine patient care or deepen financial strain across the health service.