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UK ministers are preparing to increase the amount the National Health Service pays pharmaceutical firms for medicines by up to 25%, following weeks of intensive discussions with the Trump administration and drugmakers.
The move comes as the UK faces mounting pressure to align drug prices with international standards while addressing stalled pharmaceutical investment.
Labor has drafted proposals to resolve the standoff over drug pricing, including raising the cost-effectiveness thresholds to assess new medications for NHS use.
Also Read: United Kingdom The Worst European Country For Drug Prices: Eli Lilly CEO
Citing sources, the Guardian report says the public disagreement has contributed to major companies, including Merck & Co Inc. (NYSE:MRK) and AstraZeneca Plc (NASDAQ:AZN), to pause or cancel investments in the UK while ramping up operations in the U.S.
Merck announced it would cancel its planned $1.36 billion (1 billion Sterling pounds) London research center.
The company cited Britain’s slow progress on life sciences investments and successive governments’ undervaluation of innovative medicines.
AstraZeneca also paused a planned investment of 200 million pounds ($271.26 million) in its Cambridge research site.
The Liberal Democrats criticized the proposal, questioning the cost and warning it could trigger cuts elsewhere in the NHS.
Science Secretary Patrick Vallance has acknowledged that UK spending on new medicines—currently 9% of overall NHS expenditure—lags behind the U.S. and many European countries.
Central to the plan is raising the National Institute for Health and Care Excellence (NICE) cost-effectiveness threshold by 25%.
NICE considers medicines costing 20,000–30,000 pounds ($26,500-$39,800) per additional year of quality life as good value.
The Association of the British Pharmaceutical Industry has called for a threshold of 40,000–50,000 pounds, adjusted for inflation, requiring increased NHS funding over time.
Over the summer, Health Secretary Wes Streeting proposed a deal saving the pharmaceutical industry 1 billion pounds over three years, with additional billions promised in the following decade.
Industry representatives argue that the sector faces 13.5 billion pounds in repayments over the same period, demanding roughly 2.5 billion extra annually.
Government sources told the Guardian on Wednesday that ministers are willing to spend more as medicines become increasingly innovative and preventive, citing weight-loss injections and cancer-preventing vaccine trials as examples.
Drug pricing talks between the UK government and pharmaceutical companies collapsed in August, with industry leaders warning the standoff could deter investment.
Streeting described the government’s offer as “unprecedented,” but drugmakers argued that it still imposed excessive costs and requested to negotiate directly with Prime Minister Keir Starmer.
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