As the dust settles on the announcement of the UK-US pharma deal, many questions remain for policymakers, predominantly around how increased spending on medicines will be funded.
However, from a public affairs perspective, there are important lessons to take from the build-up to the announcement and the resulting communications from the Government and related stakeholders.
The build-up
Ahead of the announcement, all the signs were there that it was coming. POLITICO initially reported that the Government was planning to increase the cost threshold that the National Institute for Health and Care Excellence (NICE) uses when determining whether a medicine offers good value-for-money.
This was then followed up by further reports that US Trade Representative Jamieson Greer would visit London on 24 November, with pharmaceuticals one of the priorities.
However, what was arguably the most noteworthy development was the Association of the British Pharmaceutical Industry (ABPI) repeatedly extending the notice period for companies to indicate that they wish to leave the voluntary scheme for branded medicines pricing, access, and growth (VPAG).
The most likely explanation for this was an imminent change to the UK’s approach to medicines spending and taken with media rumours of developments in US-UK trade talks, indicated that an announcement was coming.
DeHavilland suggested that an announcement was imminent in our autumn Budget speculation guide, and though an announcement was not made on the day, confirmation came just five days later.
It is also worth noting that the OBR’s fiscal outlook (p.122) discussed the potential for higher spending on branded medicines following negotiations. The Treasury likely chose not to include the issue in the Budget due to the potential toxicity it could cause.
On 1 December, the announcement came with the welcome news that the UK would be granted a three-year exemption from US tariffs on pharmaceuticals, pharmaceutical ingredients, and medical technology.
In return, the UK Government pledged to increase the NICE cost-effectiveness threshold, decrease the VPAG repayment rate, and increase the overall amount the NHS spends on medicines.
The resulting communications
Since the deal has been announced, the resulting communications from the Government and stakeholders have been arguably messy.
The Government has placed the most emphasis on the deal’s potentially positive impact on investment and growth, particularly from the guarantee of 0% tariffs, while also pointing to how improved access to medicines could benefit patients.
However, the communication here has been vague, and those opposing the deal have been able to take advantage of this, arguing that big pharmaceutical companies are the big winners.
One of many examples of this can be found in a recent opinion piece from Aditya Chakrabortty in The Guardian, titled “What will be the cost of Keir Starmer’s new medicines deal with Donald Trump? British lives”.
In the article, Chakrabortty highlights that the deal could lead to the NHS spending £3 billion a year more on branded medicines.
He claims that this “does not buy us anything – it is more money for the same medicines.”
However, if the increased NHS spending on medicines results from changes to NICE’s cost-effectiveness thresholds, then this argument does not hold.
The NHS will not be spending more on the same medicines; it will be increasing the amount it spends on medicines overall, since more medicines will be approved.
One may well oppose such a change, especially if they think spending should be prioritised elsewhere, but the misinterpretation here underlines the limited clarity around the deal.
The Government has tried to seize the narrative back. Following the deal, DHSC confirmed the VPAG clawback rate for new medicines in 2026 would be set at 14.5%, down from 22.9% this year.
Ironically, if one wants to claim that the outcome of the trade deal leads to big pharma benefitting more than patients, this would arguably be a better area to focus on, rather than on NICE thresholds.
The Government is aware of this and has made the case that the lower repayment rate will make the UK a more attractive country to launch clinical trials and new medicines, thereby benefitting patients.
Despite this, the miscommunication over NICE thresholds and the lack of clarity on where the extra spend on medicines will come from could give the Government a persistent headache in the coming months.
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