NHS may need to pay more for medicines to keep pharma investment, Vallance warns

The NHS will need to pay more for medicines to stop drugmakers pulling investment from Britain, science minister Lord Patrick Vallance has admitted. Big pharmaceutical companies have ditched or paused nearly £2 billion in planned UK investments so far this year. Merck scrapped plans for a £1 billion London research centre, and AstraZeneca paused a £200 million investment in Cambridge. AstraZeneca had previously ditched a £450 million vaccine plant expansion in Liverpool, while Eli Lilly paused plans for a London lab as part of a £279 million investment.

Dave Ricks, the chief executive of Eli Lilly, said the UK is “probably the worst country in Europe” for drug prices amid a row between industry and government. He warned the stance could halt investment and cause Britain to miss out on the rollout of new medicines. Vallance, a Labour peer who previously worked for GlaxoSmithKline, acknowledged that “price increases are going to be a necessary part” of resolving the dispute and said Donald Trump represented a “big factor” as the US president pushes for lower prices and more US investment. He added that the government would need to determine how any extra money for higher drug prices would be raised, with Health Secretary Wes Streeting and Chancellor Rachel Reeves weighing options.

Vallance stressed that the Trump factor is a major driver behind potential UK price adjustments, noting that drug prices are far higher in the United States than elsewhere. He said, while not asserting a direct equation between US and UK pricing, that President Trump has called for parity on pricing. “That (Trump) is a big factor and it is the case that drug prices are very much higher in the US than anywhere else in the world,” he said. Asked whether prices in the UK must rise if US prices fall, he replied: “Well, I don’t think that’s necessarily the equation, but of course, President Trump has said… he wants greater parity on pricing.”

Asked about prospects for a deal with drugmakers, he said: “I think it’s inevitable – we must end up with a deal of some sort and we have to. Because it’s in the interest of the economy, it’s in the interest of patients, and we need to get that right to make sure that patients here get rapid access to the best medicines, and to do that in a way that’s fair and equitable across the country.”

Streeting told the BBC there was “a live conversation between Government departments and the pharma industry” on drug pricing, as he attended the opening of a new £150 million Moderna vaccine site in Oxfordshire. He noted that Britain pays less for drugs than many developed peers due to a strict pricing regime and that there is pressure to scrap a rebate scheme requiring companies to contribute a portion of UK drug revenue to the NHS.

The NHS is not set to pay the higher price in order to maintain access for people with obesity and type 2 diabetes who receive medications through the health service, the notes show. Lilly last month announced a 170% price rise for its weight-loss drug Mounjaro in the UK in an effort to align prices with other European markets, amid political pressure from Trump to keep drug prices low for Americans. The government argues any adjustments must balance rapid access to innovative medicines with fair pricing across the country.