(3 days ago)
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Madam Deputy Speaker (Caroline Nokes)
The debate will be opened by the Chair of the Health and Social Care Committee. Before I call her, I wish to alert Members that the same time limit of three minutes will be imposed in this debate, and I am sure the Chair of the Select Committee will be cognisant of that during her opening remarks. I call Layla Moran.
Layla Moran (Oxford West and Abingdon) (LD)
I thank the Backbench Business Committee for granting this debate on the NHS estimates and, in particular, the impact of the UK-US pharmaceutical deal.
Let me start by briefly talking about the estimates themselves. I am sure that every Member has a copy of them; I have one every year. Given that we spend £211 billion on the NHS, it is rather extraordinary that £201 billion of that is simply two lines in this document. Last year, I made a request of the Department of Health and Social Care, in the light of the deal, that we get not just a better breakdown of the costs of the deal, but, more importantly, the ability to scrutinise the estimates.
The Treasury’s own guidance says that the information in the estimates should be “informative” to readers. We can all read it, but—goodness me!—it tells us absolutely nothing. My request of the Department again, and much more publicly, is to sort this issue out. Other Departments do this much better, so there is no reason why we cannot. The information exists; it is a question of putting it correctly in a spreadsheet.
Today, I hope that we will discuss the pharmaceutical deal. I have to admit that I had seen stuff about the deal, but it was not until a whistleblower came to my surgery that I really began to understand the implications of it. They said:
“I am a doctor, a public health specialist, and a NICE employee. I am deeply concerned by the plan to change the NICE cost-effectiveness threshold. I continue to believe that the NHS would be better off if ministers decide to scrap their original plan to spend more on new, less good value medicines, and used the money instead to provide basic things that we already know are good value, but don’t manage to provide adequately.”
Let us start by explaining what this deal does. It is worth mentioning that it is not a free trade agreement. That is quite important, because we will not get the normal mechanisms of scrutiny. This is one of the only ways that we can scrutinise it. We certainly do not get a proper vote on it. Different Committees of this House have raised that as a key point, so I am delighted that we are able to discuss it.
The deal agrees with the USA that there will be no tariffs on UK pharma exports until January 2029, and we have agreed a series of measures in return. The most important of those, which was raised by my whistleblower, is the changes to the National Institute for Health and Care Excellence thresholds. We must remember that NICE was set up as an independent body of Government to make health economics assessments for treatment and medicines, to maximise value for money. I do not need to remind the Minister that providing value for money for the taxpayer is in the NHS constitution.
The Government gave themselves powers to direct NICE on cost-effectiveness thresholds, raising them from £20,000 to £30,000 up to £25,000 to £35,000 for each quality-adjusted life year. In plain speech, that is basically the amount of money that we would spend on a medicine to increase people’s good life expectancy by one year.
Historically, the NHS has had a very good deal on medicines. That is in part because of where the QALY is set; in fact, research has been done that suggests that we could have put the figure even lower. It is not a budget, and does not have to increase with inflation. Some have made that case, and I will come back to that point in a moment.
The second part of my speech relates to changes to the rebate mechanism. There is a voluntary agreement between the British pharmaceutical industry companies, and the NHS caps the amount that it spends on branded medicines. If the NHS spends more, it claws back some of the money from those companies. Under the deal, the UK Government are limiting that to 15%, which is down from 22.9%. Let us put those two things together: we have the NHS paying more for medicines, and receiving less back through rebates.
There is an agreement in the deal that the UK will increase support for life sciences and spending on new medicines from 0.3% of GDP to 0.6% of GDP by 2036. That is an increase of spending on medicines, particularly, from 10% to 12% of the NHS budget.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
The hon. Member is making an excellent speech, and is trying to draw out the details of this deal; I am glad that one of her constituents drew her attention to it. I was lobbied by Karl Claxton at the University of York, who described this deal as an existential threat to the NHS because of the potential costs. Interestingly, the Department has not yet published its impact assessment on the deal. Does she agree that it is high time that the Department published the impact assessment and let us know the true cost of the deal?
Layla Moran
I believe that by the end of my speech, the hon. Gentleman and I will be in violent agreement, if we are not already. There is one more aspect of this, incidentally: the supply chains deal, which I understand is being crafted. We do not have time to go into that.
Jim Shannon (Strangford) (DUP)
I commend the hon. Lady on the speech she is making. It is really important that we talk about the disadvantages of this deal, and there is a clear disadvantage to Northern Ireland. Access to everyday medicines in rural communities in Strangford and across Northern Ireland will be inhibited, so does the hon. Lady agree that the Northern Ireland Assembly in particular should receive the resources necessary to deliver vital frontline service improvements? At this moment, it is not receiving those resources.
Layla Moran
That is a really good point. I will come back to generics, which make up nine in 10 of the medicines that the NHS uses. There is also an issue of devolution here, which I am sure other Members will cover. At the moment it is very complex, and it is not at all clear how the deal will apply in Scotland and Northern Ireland in particular.
We cannot divorce this deal from the geopolitics. It is only happening because Trump decided that he wanted to slap tariffs on every country in the world and on a number of different sectors. The reason why the US came after the NHS is that historically, we get an incredibly good deal, but we have to admit—this is why this debate is so important—that we are using the NHS and NICE in geopolitical negotiations to appease the current President of the United States. Although Trump probably wants to be President for much longer than he will be, his term will come to an end, but the effects of this deal will last much longer than the period of time he might be in office, and the amounts of money involved are eye-watering. I wish we had more information in the estimates, but everyone knows the pressure the NHS is under.
Sir Ashley Fox (Bridgwater) (Con)
Does the hon. Lady agree that the Government’s failure to publish the impact assessment means that NHS authorities across the country do not know how much this deal will cost them? My constituents in Somerset cannot get a GP appointment or see an NHS dentist. That is far more important to them than this obscure deal.
Layla Moran
The hon. Gentleman is absolutely right, and that lack of transparency is the nub of my speech today.
There are some potential positives in the deal. At the 10 February sitting of the Business and Trade Committee, a representative of the Association of the British Pharmaceutical Industry said that zero tariffs and commitments to the pharmaceutical market in the UK were “welcome” and had been “sought for some time”. The Government’s press release points out that patients will get access to innovative new medicines—who does not want that? Of course we all want that, especially those who have incurable cancers and so on, but there is a trade-off. We all want to bolster innovation in the UK. I have an interest—I am the MP for Oxford West and Abingdon. We are the other side of the Oxford-Cambridge growth arc. Biomedical sciences are going to drive my local economy, so I absolutely want that to happen, but there are also some important criticisms of this deal.
First, Medicines UK, which represents a large number of pharmaceutical companies based here in the UK, has real concerns. The life sciences sector plan has stalled, and Medicines UK points out that even though the companies it represents supply nine out of 10 medicines to the NHS, those companies are basically not recipients of what is good in this deal. Mark Samuels, its chief executive officer, has also pointed out that while there may be new investment in this country, particularly in R&D, if we want to create jobs and strengthen the economy, we must also address the inadequate support for the production of goods in the UK. That is where long-term value is created, and it is where the UK misses out compared with other countries. I point colleagues to Denmark, for example, which has had extraordinary success in its economy because it not only invests in R&D, but ensures that a proportion of the manufacturing happens in Denmark. That is what drives economic growth.
I now turn to the key point, which is the money. We do not know how much this deal is going to cost. There are two suggested amounts: the Institute for Fiscal Studies puts the cost at £9 billion, but the House of Commons Library briefing points out that the 0.6% of GDP in the Office for Budget Responsibility forecast actually amounts to £14 billion. As has been mentioned, that is an eye-watering amount of money, in the same period that we need to be spending money on dentists, GPs, capital investment, attendance at A&E, prevention, the shift to community and the 10-year plan.
When we should be seeing money delivered to the frontline, instead we are seeing money diverted to a small number of very large American-based pharmaceutical companies with no transparency, little debate and absolutely no vote in this House. It is the lack of scrutiny that I take issue with, and there are economists who point out that we could have an extra 330,000 excess deaths by 2036. The Minister is looking quizzically at me, but she has information that I do not. It could be that those economists are being alarmist, but maybe they are not. We simply do not know, because the Government refuse to publish the impact assessment owing to commercial sensitivities. Normally at this stage, I have a series of questions, but today—and this not just in the interests of time—I have only one: where is the impact assessment, and if the Government will not release it, what are they hiding?
Dame Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)
I thank the Chair of the Health and Social Care Committee, the hon. Member for Oxford West and Abingdon (Layla Moran) for her comments.
Life sciences are one of the country’s great strengths. We have world-leading universities, brilliant researchers, innovative companies, NHS experts and public investment. The life sciences support high-skilled jobs, drive growth and, most importantly, transform patients’ lives. The UK invented the covid vaccine, pioneered in vitro fertilisation and sequenced DNA, but we are slower than many other nations at diffusing innovation. The NHS spends £27 billion a year buying stuff that should be helping to give British patients access to innovative treatments, guaranteeing high-tech start-ups and scale-ups their first contract, and enabling clinical trials and exciting new drugs. However, in evidence to the Science, Innovation and Technology Committee, we have heard that bureaucratic processes and a culture of inertia mean that adoption is far quicker in the US, for example.
My Committee was told that the NHS has more pilots than British Airways, but innovation still is not getting through. Sometimes it can seem easier to be locked into tech giants such as Palantir. My Committee has warned against that, but we do want the UK to be a great place to grow life sciences businesses. Last year, following a series of cancelled investments, we held an emergency inquiry into this area. Witnesses were clear that the voluntary scheme for branded medicines pricing, access and growth, or VPAG, was a big issue, but there were also deeper questions on whether the UK is spending enough on medicines, whether patients are getting timely access to innovation and whether companies have confidence to invest for the long term.
I very much welcome that the UK has secured zero tariffs on pharmaceuticals and an exemption from the US’s most-favoured-nation pricing policy, but the arrangement is not treaty-based and is therefore not subject to scrutiny. The final cost is not clear. It depends on which medicines the National Institute for Health and Care Excellence approves and what the actual NHS uptake is.
We all agree that the NHS must get value for money. Every pound spent on one part of healthcare is precious and cannot be spent elsewhere, but innovative treatments can reduce healthcare demand, and companies need to know that they have a market if they are to invest in research and development, clinical trials and manufacturing in the UK. The Minister needs to explain how these figures, such as the 0.6% of GDP, were arrived at. What international analysis has the Minister commissioned to justify them? In particular, where does the UK sit internationally? We heard from President Trump that the UK does not pay enough, but the US system is one of the most bloated and overpriced in the world, with health accounting for 18% of GDP, with worse outcomes than the NHS, which accounts for 10% of UK GDP.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
An estimated 229,000 excess deaths by 2036—that is the eye-watering figure that BMJ analysis identifies as the upshot of diverting NHS funding to pay more for pharmaceuticals in response to Trump’s threats.
Estimates day debates exist to scrutinise how public money will be spent before that spending has happened, not least when the decisions could have such damaging consequences for the health of our nation. This estimates day debate does not include the full budgetary consequences of the UK-US pharmaceutical deal agreed on 1 December. When we look at the cost, the Government’s figures simply do not stack up. Instead, we see a structural weakening of NHS safeguards on drug pricing, higher thresholds, weaker rebate mechanisms and a commitment to dramatically increase spending, which will prove devastating for patient health.
Ministers claim that the arrangement will cost about £1 billion over the current spending review period, but independent analysis tells a different story. Using the projections of the Office for Budget Responsibility, the House of Commons Library suggests that increasing spending on medicines in line with the Government’s commitments would require about £1.7 billion extra by 2028, and potentially as much as £14 billion a year by 2036.
The Government have been clear on one point, and one point only: they say that those increased costs will come from existing NHS budgets. No new funding has been guaranteed. Every extra billion spent on higher-priced medicines is a billion not spent elsewhere in a system that is already under immense strain. This is money not spent on tackling waiting lists, not spent on primary care, and not spent on saving lives. As we have heard, the Nuffield Trust has made that point starkly, estimating that the NHS will be able to save 340,000 fewer years of quality-adjusted life in 2035 if the promised spending goes ahead.
Despite the magnitude of these changes, the Government have refused to publish the full impact assessment of the deal that they hold. Why? This worrying development can be seen in the way in which the UK-US pharma deal was forced through, with no vote and scant parliamentary oversight. Let me summarise what I wrote on PoliticsHome back in March. This deal will increase the cost-effectiveness threshold set by the National Institute for Health and Care Excellence, curtail the overall cost cap on patented medicines, double the amount spent on such medicines, and increase the share of the NHS budget allocated to medicines. That should worry every Member of this House, because once those safeguards have been eroded, they are very difficult to restore.
Sadik Al-Hassan (North Somerset) (Lab)
I must declare an interest as a registered pharmacist for nearly two decades and an expert on pharmacy procurement.
Let be begin by saying that I welcome the UK-US pharmaceutical trade agreement, and also by saying something quite controversial: President Donald Trump is right. We do underpay for drugs—not just our expensive, lifesaving rare cancer drugs, but the everyday drugs that we purchase.
Iqbal Mohamed
Will the hon. Gentleman to comment on the fact that the NHS pays 10 times the manufacturing costs for over 80% of the licensed medicines that we buy? How is that underpaying?
Sadik Al-Hassan
I am not sure where the hon. Gentleman’s figures come from. When we look at the drug tariff reimbursement, which is the system that we use to pay, and compare it with the arrangements in other countries, it is clear that we underpay significantly. Perhaps he is referring to something of which I am unaware; I should be happy to chat to him outside.
We in this country are addicted to low-cost drugs for our health service, and what does that addiction mean? It means that we have the lowest costs and we always go for the cheapest drugs, and that favours foreign manufacturers. It destroys UK supply chains, as we have seen over the last 25 years, and it endangers our resilience as a country. We are already seeing the side effects of that, with drugs being out of stock. We have a system for payment called the drug tariff, which establishes how much pharmacies will buy drugs for and how much they will be reimbursed for. There are currently 254 price concessions. Price concessions happen when a drug is out of stock, and we must make an emergency increase to the price in the drug tariff to try to bring it back into the country. Given that there are 3,500 drugs in that section of the drug tariff, 254 does not sound a lot, but it is the highest level that I remember seeing in my entire professional career. Last month’s highest level of 230 has just been exceeded.
Cheap drugs often mean that we overvalue the benefit of medicines in our system and use a “drug first” approach in the NHS, and that has continued for decades. When we increase the price that we pay for drugs, it allows us to start considering the benefits of other types of treatment, such as social prescribing. Social prescribing becomes a great deal cheaper by comparison in a system in which drugs are valued at the correct level. The all-party parliamentary group on pharmacy, which I chair, published a report in June 2025 that laid out some of the problems with drug pricing and availability. I absolutely support the idea of paying more for drugs, because at the moment we are building a system that is creaking and breaking. By trying to pursue every penny of savings, we have destroyed UK manufacturing and offshored our problems. The only way to bring that back is to rebuild the drug tariff, with the idea of paying to procure more in the UK.
Layla Moran
I am grateful to the hon. Gentleman for his speech, because he is showing how important this debate is. A lot of this has not been flushed out. Medicines UK, which is responsible for a lot of the generics that he talks about, disagrees with him, but that is a conversation for another time. My question is specific: does he agree that the lack of transparency behind this deal, and the lack of an impact assessment, is a material issue and that we should ask the Government to release such information?
Sadik Al-Hassan
First of all, Medicines UK does not disagree with me; its members disagree that the value from the UK-US trade deal will go to people other than them. Medicines UK actually thinks that companies are not paid enough for drugs in this country. Unfortunately, you might need to go and have a chat with the association about that, because you might have misunderstood.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. You mean “the hon. Member”, not “you”—I do not need to go anywhere. I ask the hon. Member please to wrap up as soon as he can, because we have many speeches to get in.
Sadik Al-Hassan
In conclusion, I welcome the deal. I hope we find a way to pay for drugs correctly in this country, so that we value them properly and can value the rest of the system.
Madam Deputy Speaker
I will give Front Benchers a heads-up: we are not going to have a huge amount of time, so please edit your speeches accordingly.
John McDonnell (Hayes and Harlington) (Lab)
The debate we have had so far highlights the issue at hand. This is an immense change to the way in which we will determine the delivery of drugs to the NHS, and one of my fears is that it will begin to weaken the existing controls. I think it politicises the process, because what will happen now is that Ministers will be able to determine the thresholds. In addition, I am concerned that decision making in the negotiations with the pharmaceutical companies has been transferred from NHS England to the Department itself. There will be real concerns that when we look for objective advice from NICE, the system that we have will now be politicised. I say to my hon. Friend on the Front Bench that it behoves the Government to ensure that we have a proper debate on this issue.
I welcome the comments that have just been made by my hon. Friend the Member for North Somerset (Sadik Al-Hassan), because I find them interesting, just as I have found the contributions from Members across the House. The costs have been set out today, and there is a vast range of figures. This could be resolved if the Government just published the impact study that we have all been asking for.
Members have emphasised that when No. 10 said very clearly that any additional costs would have to come from the NHS, we wanted to have a debate so that we could ask, “Where from? What areas of service will be reduced?”
Peter Dowd (Bootle) (Lab)
The NHS will carry out screening and evaluation of newborn babies for spinal muscular atrophy, or SMA, which causes spinal cord deterioration. It is a devastating genetic condition. The evaluation will start in October in England, but not in Northern Ireland or anywhere else. Does my hon. Friend agree that the will must be found to ensure comprehensive cover for all nations? We can have no more delays. We need action now to save the lives of children and prevent trauma for families.
John McDonnell
That is an incredibly relevant point in this debate. Many of us have examples of that, which is why we need to have a wider debate about the supply of drugs, their effectiveness and how they are evaluated. I thought we had a relatively objective system, but the deal throws that objectivity into question.
Figures on the scale of deaths have been bandied about. I want to hear the Government’s view and their proper analysis of that, because we have to engage with the reports from Karl Claxton, Andrew Hill and so forth, as others have mentioned.
The justification for the Trump deal was that it would increase UK exports to the US and increase overall investment in drugs in this country. I have yet to see any published evidence of that; in fact, the Government have not brought forward any evidence.
I also say to my hon. Friend the Minister, and this is political, that I remember the commitment given by the Prime Minister and the former Health Secretary that the NHS would not be on the table in any Trump deals. This deal does put it on the table, because it has consequences not just for the supply of drugs, but for investment in the NHS and decision making about what our constituents can access. It relates not only to what level of drugs they can access, but—if there are reductions in other expenditure—to whether they will get access to a GP or A&E, or get the care services for which we have been advocating for quite a while.
I thank the people who have been providing us with briefings on this issue, such as Global Justice Now and Just Treatment, which I have worked with over the years. They want to engage in the debate with the Government and to bring their expertise to the table, so I would welcome a commitment from the Minister to bring in those organisations before we move forward with implementation. This is my worry and that of those I have worked with: Kamran Abbasi, the editor of The British Medical Journal, has said that the deal
“will end up harming vulnerable people to boost the profits of already obscenely profitable drug companies.”
I do not want to support a deal that does that.
Rachael Maskell (York Central) (Lab/Co-op)
This debate should have taken place long before a deal was signed, and the fact that we are having it months afterwards shows that there is still no transparency.
Last December, the pharma and health tech deal was signed, and it was made clear that money would have to be taken out of the Department of Health while the Government were trying to solve a Treasury problem. As we have heard, that problem was the trade deal with the US and the wider relationship. The big question that has not been answered is this: if we are going to take money out to fund this deal—we have heard that from 0.3% to 0.6% of GDP will be spent on pharma—where are the cuts going to fall? Research shows that excess deaths will result.
We also know that at the same time as paying more, we will get a lower rebate—down from 25% to 14.5%—so VPAG will be more expensive. As a result, we will be paying more for our drugs and getting less back. In developing countries, which benefit from the way the health system works, the toll will be even more significant. As NICE changes its relationship and its function, and of course does not have the independence it was set up to have, there will ultimately be more flexibility for Ministers to make determinations about drugs.
Not only will there be a cumulative cost of £2.6 billion by the end of 2028, but that is estimated to go up to £44.7 billion. That is why we need to see the impact assessment—so that the Government can prove to us that that is not the case. Of course, for every £1 billion cut from budgets, £118 million is cut from social care. That leads on to the excess deaths, which will depend on where those cuts fall. We obviously want the Government to be transparent with us, because this is about the lives of our constituents. The data shows that there will be 229,000 excess deaths by 2033. That is almost double the number of deaths during covid. However, putting everything together, the figure could be as high as 291,000 excess deaths. Exactly which of our constituents are going to pay the price for this deal?
NICE itself predicts that the benefit will bring only between two and five additional drug approvals annually, so for very little gain we could be paying an exceedingly high price. One of my biggest fears is that the ratchet of the focus of the US on the NHS, which it has always had, will draw the drug companies in even closer, and if another party gets control of our NHS, it could well fall into the hands of the US. We need that impact assessment, we need transparency and we need to protect lives.
Sam Carling (North West Cambridgeshire) (Lab)
I, too, thank the Chair of the Select Committee, the hon. Member for Oxford West and Abingdon (Layla Moran) for securing this debate, and I, too, wish we had more time. I also thank my hon. Friend the Member for North Somerset (Sadik Al-Hassan), who made some difficult, but really important points.
This is a timely debate, because pharmaceuticals are core both to supporting a healthier population and to delivering economic growth. The main estimates memorandum outlines an expectation of just under £2 billion of R&D expenditure over the coming year from the DHSC, which is roughly equal to the figure in the previous estimates, and I welcome that.
Of course, private investment also plays a significant role in drug development. That is why I am so pleased to see increasing confidence from the private sector in the UK as an environment in which to do impactful research. Last month, we saw AstraZeneca commit £300 million in investment across the UK, after this Government’s work to agree a pharmaceutical deal with the US enabled that investment. However, there is much more to do to create a regulatory environment that encourages investment into clinical research in the UK. I encourage the Department of Health and Social Care and the Department for Science, Innovation and Technology to consider simplifying and consolidating our regulatory landscape.
I am not here to criticise our regulators, who I believe do a very good job in their respective roles. I have regular engagement with research scientists, universities and professional bodies through my work as chair of the all-party parliamentary group known as the Parliamentary and Scientific Committee. This is the oldest APPG, which was established in 1939 to better connect scientists and parliamentarians in the interests of better policy. The overwhelming message is that, actually, regulators get it and want to enable research and growth, not hinder it, but that the overall landscape is just so complex that approvals are taking far longer than they need to.
In a contribution to the King’s Speech debate last month, I listed a range of regulators: the MHRA, NICE, the Health and Safety Executive, the Human Tissue Authority, the Health Research Authority, the Human Fertilisation and Embryology Authority, the Animals in Science Regulation Unit, and so on. That is just too many regulators and that is not even all of them. I very much hope the Government will use the upcoming regulating for growth Bill to look at how to reduce overlap and streamline the environment. Having to get so many decisions slows down research and innovation enormously, particularly when researchers have to apply for clearance from them sequentially in most cases, rather than in tandem, stretching the overall timeline.
I propose another solution. Why do we not create a single front door for study approvals: a unified application process that collects all the information that different regulators might need, so that researchers can fill in one form, and a team of recruited staff whose job it is to liaise with all the regulators, establish who needs to approve the individual study in question and pass along the information necessary, ideally in tandem rather than each approval being sequential and relying on the last?
I hope the Minister will take some of those ideas on board. There are many reasons to be optimistic. The UK has been, and in many areas still is, a world leader in drug development. Let us keep building on that.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Liberal Democrat spokesperson, who I thank for agreeing to make a very short speech.
Helen Maguire (Epsom and Ewell) (LD)
Today we are being asked to approve a motion on the main estimates for the Department of Health and Social Care for 2026-27, in which pharmaceutical spending is not separately identified, in either the estimate or its accompanying memorandum. We are being asked to approve spending without clear visibility of exactly how much is budgeted for medicines. That is against the principle of estimates day, which is to scrutinise spending before it is authorised.
This is yet another example of the lack of transparency around the murky UK-US pharmaceutical deal. It was drawn up in secret and the Government are refusing to publish the impact assessment. The Government must be clear on how much is budgeted for medicines, how much they expect the deal to cost and the risks to the frontline associated with diverting money from elsewhere in the NHS.
The UK-US pharmaceutical deal should never have been allowed to go ahead. The deal will see the NHS paying out at least £1.5 billion more in higher medicine costs by 2028, rising to over £9 billion by 2036. The Government have made it clear that there will be no additional money to fund that over the next spending period. That means frontline NHS services will be plundered at the behest of a foreign Government, while patients suffer in crammed hospital corridors and cannot get a GP appointment.
We must support the British life sciences sector. We can find ways to achieve that, but it must be a domestic matter for the UK Government to solve holistically through negotiations with the sector. It should not be dictated from Washington. The Government refused to publish an assessment of the impact of the deal. What are they trying to hide? The bottom line is that medicine procurement should be based on sovereign health needs. This is not a matter of being pro or anti the pharmaceutical industry. We need to find a solution that works for patients, the NHS and the life sciences sector.
Rather than defund vital NHS services in a knee-jerk deal, the Liberal Democrats would take real action to strengthen our life sciences sector by: developing a long-term plan with the sector to ensure certainty on issues such as VPAG—the Voluntary Scheme for Branded Medicines Pricing and Access—and rapid licensing by ensuring that the needs of our society are reflected in the approach of NICE and other regulatory bodies; promoting investment into upscaling UK life sciences manufacturing; encouraging investment in vaccine, medicine and antibiotic medicine manufacturing plants; reviewing the relationship between research and development tax credits and manufacturing; and establishing a fellowship programme for scientists working on health conditions, such as cancer, so they can continue the research Trump has defunded in the US. We would also cut the cost of visas for researchers, as well as boost R&D funding to 3.5% through a decade-long programme of public investment. Rather than spending billions to pay off a bully in the White House, the Liberal Democrats would oppose the deal, develop a plan for our life sciences that reflects our national interest and invest money in vital frontline services that are in dire need of funding. The Institute for Fiscal Studies has indicated that the deal could cost as much as £9 billion by 2036. That money would be transformative for so much of the NHS: it would end corridor care, hire thousands more staff, buy countless radiotherapy machines, or deliver high-quality care and help for elderly and disabled people.
Any choices over money spent in our NHS must be made by the British people, not Trump. It is unacceptable that Trump thinks he can meddle in our NHS, and, worse still, that the Prime Minister lets him. That is why the Liberal Democrats wrote to the Prime Minister in December, demanding that the deal was put before Parliament for a vote. If the Prime Minister cares as much about the NHS as he claims, I encourage him to set the record straight, show his true feelings on the deal and, at the very least, bring it before the House for approval.
This House, and the voters who elected us, decide matters of national importance, not the White House. That is why the Liberal Democrats tabled new clause 76 to the Health Bill, which would bring the deal before the House for a vote. Any deal that diverts billions of pounds away from NHS frontline services must be subject to democratic process and parliamentary scrutiny.
Dr Luke Evans (Hinckley and Bosworth) (Con)
I will dispense with the formalities to jump straight in. The hon. Member for Oxford West and Abingdon (Layla Moran) asked whether the Government have a clear, funded and transparent plan. Simply put, the Government appear to have made commitments they cannot properly explain, cannot fully cost, and cannot tell Parliament how they intend to pay for.
We are of course talking about the UK-US pharmaceutical arrangement, which will see 0.3% of GDP in 2026, rising to at least 0.6% by 2036—or an overall medicine spend of 10% to 12% of the UK NHS budget by 2036. That may bring benefits and investment, it may avoid tariffs, and it may help some patients get treatment faster, but those benefits do not remove the three key basic questions: what will this cost, how will it be funded, and what will the NHS have to forgo as a consequence? Those questions remain unanswered, which is a running theme from this Government.
Since Labour took office in July 2024, the pharmaceutical sector has issued a serious set of stark warnings. In January 2025, AstraZeneca cancelled its £450 million expansion near Liverpool, citing as a factor in the decision
“the timing and reduction of the final offer compared to the previous Government's proposal”.
However, that was not isolated. In March 2025, the leaders of some of the UK’s biggest pharmaceutical companies warned that the country risked becoming “uninvestable”. That warning turned into decisions, with MSD cancelling its plans for a £1 billion research centre in London, Eli Lilly pausing its work on the Gateway Labs hub, and Sanofi saying that it would not make substantial UK R&D investment until it saw appropriate recognition of the value of innovation.
Joe Robertson (Isle of Wight East) (Con)
Given that there are so many unanswered questions and such little information, rather than estimates day, wouldn’t the better name for this debate be “a complete stab in the dark” day?
Dr Evans
Or guesstimates day, for want of a better pun. That is part of the problem. If the Government are so confident, why do they not produce the impact report so that they can justify this? At the end of the day, we have seen that those decisions are not isolated; they are different companies, making different decisions, but all with the same concern. It is a pattern: tax rises, more regulation, more red tape—a more toxic concoction.
The Government will say that the deal is part of the answer, but Ministers cannot point to potential benefits while avoiding certain costs. The House of Commons Library is clear that the Department’s main estimate for 2026-27 does not include budget cover to meet the expected increase in pharmaceutical spending associated with the UK-US arrangement. That is the central problem. The Government say that the total cost in the current spending review period is expected to be around £1 billion, but the former Minister, the hon. Member for Glasgow South West (Dr Ahmed), also said,
“Total costs over the Spending Review period are expected to be approximately £1 billion. The final costs will depend on which medicines NICE recommends and the actual uptake of these.”
That is an important admission, because the final cost depends on future NICE decisions and uptake, and other estimates are higher.
The Library briefing cites analysis suggesting that spending could be around £1.7 billion by the end of 2028, and around £14 billion by 2036, depending on the assumptions. Is the £1 billion the central estimate, and if so, what are the lower and higher ends of the estimate range? Why will the Government not publish the modelling so that we can see? My next question is even sharper: where is the money coming from? We know from leaked WhatsApp messages that Labour MPs have been asking who they can tax to pay for benefits, so where is the money coming from? Both the House and the public are right to ask.
The Government have said that additional costs will be funded from existing NHS budgets, with future funding settled at the next spending review. However, if the money is coming from existing NHS budgets, it is coming from somewhere within the NHS. It might be the workforce, services, capital or future growth, but it will not be cost free. As Jonathan Benger, the chief executive of NICE, put it,
“If they choose to spend money on defence, they’ve got to pay for that somehow, either by raising taxes or removing money from somewhere else. If they choose to spend money more on medicines, similarly, that has to be paid for.”
That is the reality.
The former Secretary of State told the House that the Government would not cut NHS budgets to fund the pharma deal, but the former Health Minister, the hon. Member for Glasgow South West, later turned around and said:
“The deal will be funded by allocations made at the Spending Review, where record funding for the NHS was secured. Future funding will be settled at the next Spending Review.”
Those statements need reconciling. If it is funded from NHS allocations, that is NHS money. Can the Minister rule out any cuts from the frontline?
Finally, I will turn to transparency. I want to point out that the UK-US pharmaceutical arrangement is not a treaty-based free trade agreement. It has not been through the Constitutional Reform and Governance Act process. We have not seen what is going on. The Government need to publish their impact assessment, and yet they cite commercial sensitivity. Of course, there is a way round that: the Minister could redact it and give that to the Committee so that we and this House can see what is going on.
I will cut my speech short there. I will simply pose—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Very quickly, shadow Minister. Ten seconds.
The Parliamentary Under-Secretary of State for Health and Social Care (Preet Kaur Gill)
I will try to answer all the questions that have been put to me in the short time I have. First, I am grateful for the contributions made by hon. Members, and I thank the Chair of the Health and Social Care Committee, the hon. Member for Oxford West and Abingdon (Layla Moran), for securing this debate.
The UK-US pharmaceuticals arrangement is an important step forward for patient access to innovation and the future of our life sciences sector. This arrangement is fundamentally about patients by ensuring that they can benefit from life-changing medicines as they are developed, rather than see the UK being left behind. We have already seen the benefit from those changes, with NICE approving life-changing treatments such as vorasidenib, a brain cancer drug for patients as young as 12.
The UK’s life sciences sector is one of our greatest national strengths. It saves lives, supports jobs and underpins innovation across our economy. I am proud that thanks to this arrangement, the United Kingdom will be the only country in the world to have secured a commitment to tariff-free access for pharmaceutical exports into the United States.
The Chair of the Committee raised NICE and VPAG changes and rebates. My right hon. Friend the Member for Hayes and Harlington (John McDonnell) also raised a number of issues, as did my hon. Friend the Member for York Central (Rachael Maskell). I will address them now.
The joint Government and industry taskforce has been discussing the options for continuing to evolve our system to ensure that we maximise benefits to patients and the economy. It will make recommendations on pilot programmes as per the UK-US arrangement commitment, and I look forward to providing an update to the Committee on that in due course.
I know there has been concern that these changes undermine NICE’s independence, but that is not the case—let me just be clear about that. NICE will continue to make its recommendations based on evidence, clinical effectiveness and value for money, free from political interference. The change will allow Ministers to set the overall threshold within which NICE operates, not to determine individual decisions. This will preserve NICE’s core role as an independent evaluator, while ensuring that the framework that it uses reflects how we value innovation and patient benefit.
Concerns were also raised about the fact that the UK commitments are larger than the US commitments, but I do not agree. The UK has made policy changes to improve access for patients, while the US has committed to tariff protection for UK exports, which is significant given the scale of that market. The commitments deliver improved patient access in the UK and protection for UK exports.
Preet Kaur Gill
I am trying to get through all these questions as quickly as I can. I will give way to the hon. Gentleman shortly.
On the VPAG changes and rebates, alongside changes to NICE recommendations, the arrangement affects how pricing and repayment mechanisms operate through the voluntary scheme for branded medicines pricing, access and growth. To ensure predictability for the industry going forwards, given the unexpectedly high payment percentage for newer medicines for 2025, the Government have committed to ensuring that future VPAG rates do not exceed 15%. This will support life sciences investment and patient access to medicines while ensuring that the scheme can continue to work for both industry and the NHS, keeping the medicines budget sustainable. I look forward to engaging with the sector on the future of the voluntary scheme, with negotiations due to begin next year informed by the outcomes or interim findings from pilot programmes that were launched as early as this September.
Preet Kaur Gill
With respect, I am going to answer the questions that have been put to me by many hon. Members, and I am coming to the impact assessment.
We have been clear that the estimated short-term impact is around £1 billion in England over the spending review period. Costs will increase over time as NICE approves more medicines, but precise long-term costs cannot be modelled as a single figure; they depend on future medicines, NICE approvals, uptake and wider commercial developments.
Members mentioned a number of figures. I do not recognise the £9 billion and £14 billion figures for costs. Spending on innovative medicines increases year on year as new treatments become available, so underlining growth would be expected to continue regardless of this arrangement, and often the figures cited publicly do not take that into account. We are committed to increasing spending on medicines as a proportion of NHS spend, ending the recent decline in the proportion of health spend dedicated to medicines and increasing spending on innovative medicines to 0.6% of GDP.
The Chair of the Science, Innovation and Technology Committee, my hon. Friend the Member for Newcastle upon Tyne Central and West (Dame Chi Onwurah), and my hon. Friend the Member for North West Cambridgeshire (Sam Carling) raised a really important point. Life sciences is one of our most productive sectors. It underpins research and development, clinical trials and high-value manufacturing, and it supports jobs across the country. Over £1 billion in industry investment has already been secured since the announcement of this arrangement in December last year. That includes AstraZeneca’s recent announcement of a £300 million investment into R&D sites at Cambridge and Macclesfield. That demonstrates the confidence that this key sector has in the UK. Maintaining a strong commercial environment helps ensure continued investment and the development of new treatments. This is not separate from patient benefit. It enables the pipeline of the new medicines that NHS patients ultimately rely on.
Layla Moran
I am frustrated, because everything the Minister is saying is in the press release. Can she please answer the question? Will the Government release the impact assessment? If they will not, will they at least allow a Select Committee to see it confidentially?
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. We are running out of time. Minister, please respond as briefly as you can.
Preet Kaur Gill
I recognise the Committee’s request for the impact assessment, but the analysis is scenario-based, contains commercially sensitive assumptions and remains linked to live policy development. Officials should be able to produce confidential advice for Ministers to inform trade and other negotiations, and we will not apologise for maintaining such confidentially where doing so is in the national interest.
Madam Deputy Speaker
I call Layla Moran to wind up the debate briefly, in under a minute.