The cost of the government’s drug pricing deal with the Trump administration will come out of the NHS budget instead of the Treasury’s and could eventually reach £9bn a year, campaigners fear.
Patrick Vallance, the science minister, has confirmed that the costs – initially an extra £1bn over three years– will be borne by the Department of Health and Social Care, which funds the NHS in England, and not the Treasury.
His admission, in a letter to the Commons science, innovation and technology committee, is the first time the government has specified which Whitehall department would foot the bill.
It comes amid growing concern among Labour, Liberal Democrat, Green and Scottish National party MPs that ministers have been evasive about the costs involved and risk that the NHS may have to cut services in order to pay the 25% higher prices for new drugs that ministers agreed to.
The £1bn is the estimated extra cost for the first three years of the 10-year deal the government announced on 1 December. The extra spending needed by 2035, when the deal ends, could be as much as £9bn each year, campaigners have said.
The Lib Dems have criticised the agreement as a Trump shakedown of the NHS and “just a desperate ploy to placate Trump” by the prime minister, Keir Starmer.
The deal applies only to newly developed medicines and not to established generic drugs, which make up most of the NHS’s £20bn annual spending on pharmaceuticals.
In his letter to the committee, Vallance said the DHSC, NHS England and the National Institute for Care and Health Excellence had undertaken a joint analysis of the deal’s costs.
“Overall, the combined analysis is that the deal commitments will cost about £1bn in England over the remaining three years of the spending review.” That period is until the end of March 2029.
Vallance sought to calm fears about the NHS’s budget being used to pay for more expensive drugs by stressing that “this deal will be funded by allocations made to DHSC at the spending review, where frontline services will remain protected through the record funding secured.”
Dr Layla McCay, the director of policy at the NHS Confederation and NHS Providers, warned that cuts were inevitable and said that NHS trust bosses “will be concerned to note that against an already very challenging financial environment DHSC budgets will be used”.
She added: “It also remains unclear which planned DHSC spending will need to be cut to cover the costs of higher medicines spending.”
The government has agreed as part of the deal to double the UK’s spending on all drugs by 2035 from 0.3% to 0.6% of GDP but has not given any figures as to how much that will cost.
Tim Bierley, of Global Justice Now, said that despite Vallance’s letter, ministers were still refusing to set out how much the government will have to pay for drugs in the long term.
“It’s incredible that ministers continue to hide behind the short-term costs of this deal when they know the bill will grow every year. Doubling spending on medicines as a percentage of GDP … would mean an additional £9bn a year by 2035.
“The government must come clean about the true costs of this deal, change course and stand up to corporate interests working with Trump to loot our health system.”
Vallance was responding to a demand from Chi Onwurah, the chair of the committee, for greater clarity on the costs of the deal.
“This deal carried a significant cost and it’s up to the government to ensure that it delivers significant return”, she said. “It’s crucial that the benefits to UK patients outweigh the projected financial cost, particularly given the huge existing demands on the NHS.”
