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The agreement sees the UK’s threshold for what it can pay for new medicines raised by 25%.
Helen CorbettTuesday 02 December 2025 13:52 GMT
open image in galleryDowning Street said the cost of the deal will be around £1 billion a year (Julien Behal/PA) (PA Wire)
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A deal that gives the US zero tariffs on its imports of UK pharmaceuticals in return for the NHS raising spending on medicines will cost around £1 billion, Downing Street has said.
The agreement sees the UK’s threshold for what it can pay for new medicines raised by 25%, meaning some that would have been declined as too costly can be approved – such as breakthrough cancer treatments and therapies for rare diseases.
The Prime Minister’s spokesman dismissed reports that the move would cost the NHS some £3 billion a year on average by 2029, saying the figure would be around £1 billion by that time.
He said the cost would gradually climb as the National Institute for Health and Care Excellence (NICE) approves treatments.
“Costs will start smaller 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 clearly depend on which medicines NICE decides to approve, and the actual uptake of these.
“It’s not something we can pre-empt, because it depends on which drugs come to market and which are assessed as approved for use on the NHS accordingly.”
The agreement also includes lowering repayment rates on NHS drug prices to 15% from 2026.
This is the amount that drugs firms pay back to the NHS to ensure it does not overspend its allocated budget for branded medicines.
The US will not pay import taxes for three years on medicines and treatments under the deal, which the Trump administration has said will boost UK investment in US drug firms.
It comes after warnings that US pharma firms would shut down their sites in the UK if the NHS did not pay more for drugs.
Earlier this month, US ambassador Warren Stephens said further American businesses will axe future investments if “there are not changes made and fast”.
The row has been seen as a reason why US-based Merck and AstraZeneca cancelled or paused investments in the UK in recent months.
