The UK and US have agreed a new trade deal that will mean 0% tariffs on all pharmaceutical exports to the US for at least three years and an increase to the amount the NHS is willing to spend on medicines, the Department of Health and Social Care (DHSC) has announced.
The deal will also secure ‘preferential terms’ for the UK’s med tech exports, meaning there will be no additional tariffs on medical tech. This is hoped to unlock further investments in the UK.
However, health leaders have called for clarity over how higher drug prices will be paid for, urging that they will be funded by the Treasury.
The trade deal – part of the UK-US Economic Prosperity Deal, signed in May – will expand access to vital drugs, safeguard the country’s medicine supply chain, and drive investment, according to the Government.
Business and trade secretary, Peter Kyle, said: ‘This deal guarantees that UK pharmaceutical exports – worth at least £5 billion a year – will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences.’
And science minister Lord Vallance said the benefits were twofold: it will help the country secure the best, most innovative treatments and it will boost the pharmaceutical industry.
‘We are entering an era of preventions and cures, and this landmark deal will ensure British patients are among the first in the world to access them,’ he added.
The government also said it will increase the price threshold at which it determines medicines to be too expensive by around 25%.
National Institute for Health and Care Excellence (NICE) currently assesses value for money for the NHS by applying a cost-effectiveness range of £20,000-30,000 per quality adjusted life year (QALY) gained over and above current treatments. It has now been agreed that NICE will apply new thresholds of £25,000-35,000 per QALY.
It means NICE will be able to approve medicines that may previously have been declined on cost-effectiveness grounds, such as new cancer treatments or therapies for rare diseases.
NICE will also introduce a new value set for judging health states. This value set comes from asking thousands of people from the public to judge how good or bad different health states would be. These are used to calculate numerical values, which help healthcare decision-makers compare different treatments.
However, health leaders have called for clarity on the funding to pay for these higher drug prices.
Dr Layla McCay, director of policy at the NHS Confederation said: ‘Healthcare leaders know that a thriving health and life sciences sector is key to ensuring that patients can access the treatments and innovations they need, at the best value to the NHS, whilst also supporting economic growth.
‘Medicines also have a key role to play in delivering the government’s three shifts for the NHS, including keeping people out of hospital.
‘However, the NHS budget in England is under significant pressure from the rising demand for care, coupled with ongoing strike action, so we will need to understand how these higher drug prices will be paid for. Any uplift in medicines prices would need to be funded by HM Treasury.
‘An increase in medicines spending that is funded within existing planned NHS budgets, presents risks to the quality of services to patients and could result in difficult decisions about what the health service needs to cut back on.’
Nuffield Trust senior policy analyst Sally Gainsbury added that higher prices for new branded medicines would be ‘bad news for anyone who wants to see the NHS get the most health benefit for patients out of its spending’.
‘A big increase in the price the NHS pays by raising the NICE threshold will not bring additional benefits for the population as a whole, it will just make healthcare more expensive,’ she said.
‘The NHS budget is already under intense pressure and so the reported £3 billion extra cost will need to be fully funded by the Treasury. However, even if it is not to come from day-to-day NHS budgets, that will not stop this being a deal that undermines the NHS’s ability to get the most health benefits for patients out of its resources.’
But science and technology secretary, Liz Kendall, said the deal was ‘vital’ to ensure the UK get access to ‘cutting-edge medicines’ they need and that UK firms can continue developing treatments.
‘It will also enable and incentivise life sciences companies to continue to invest and innovate right here in the UK. This will support thousands of skilled jobs, boost our economy and ensure that the breakthroughs that happen in our labs turn into treatments that benefit families across the country,’ she said.
Chief executive of the Association of the British Pharmaceutical Industry (ABPI), Richard Torbett, added that the deal is an ‘important step’ towards ensuring patients can access innovative medicines needed to improve wider NHS health outcomes.
He also said the deal begins to address industry concerns about NHS access to medicines, and the UK’s record-high payment rate, yet many details remain unclear and there are further technical improvements to make.
The Autumn Budget analysis document, released early in error by the Office for Budget Responsibility (OBR), highlighted the risk of pharmaceutical spending.
It said: ‘Risks to health spending include the impact on the NHS budget of any further strikes, and the Government’s negotiations for the US trade deal on the cost of pharmaceutical spending within the NHS.’
CEO of Asthma + Lung UK, Sarah Sleet, said people with lung conditions would welcome the news. ‘Raising the cost effectiveness thresholds and updating NICE’s methods should make it easier for proven, high value treatments to reach the people who need them most,’ she said.
The chief executive of Brain Tumour Research, Dan Knowles, and the chief executive of Myeloma UK, Dr Sophie Castell, both echoed her enthusiasm and expressed hope that the deal will improve access to innovative medicines.
This deal aligns with the ambitions in the 10 Year Health Plan and forms part of the Government’s Life Sciences Sector Plan, it added.
A version of this story was first published on our sister title The Pharmacist.
