The UK-US medicines deal and the hidden costs of Brexit

Vilija Vėlyvytė argues that the UK-US medicines deal which will see the NHS pay more for new medicines is an unexpected cost of Brexit. 

Earlier this year, the government published the terms of the UK–US medicines deal agreed late last year. The deal secures zero tariffs on UK pharmaceutical exports to the US for three years but commits the NHS to paying substantially higher prices for new medicines. This deal should be understood as one of Brexit’s hidden costs.

The UK’s principal commitment under the deal is to double the share of GDP spent on new medicines by 2036 – estimated to require around £14 billion in additional annual spending by then. In relation to this, the UK has also agreed to raise the net price paid by the NHS for newly launched medicines by 25%. In practice, this means that drugs previously judged too expensive for the benefits they offered might now be recommended for NHS use.

The deal is undoubtedly a win for the pharmaceutical industry, particularly large US drugmakers. The government says that is precisely the point: offering industry more favourable terms will make a wider range of innovative medicines available through the NHS and attract greater investment in life sciences. The promised payoff is better outcomes for patients.

But that is only one side of the bargain. As analysis by the Nuffield Trust and others suggests, higher spending on medicines will increase pressure on an already overstretched NHS, leaving less for other services – from GP appointments to operations for those on waiting lists. The government disputes this, yet it has refused to publish an impact assessment behind the deal.

Trade-offs could potentially be avoided if the higher medicines spending were matched by additional funding. But no such funding has been allocated: as things stand, the cost will be met from existing NHS budgets. A deal presented as a win for patients may therefore leave both patients and the NHS worse off.

Why, then, did the UK accept such a risky bargain?

The answer is that the UK was poorly positioned to refuse. Brexit is a large part of the reason why, as it dealt a serious blow to the country’s appeal as a medicines market and, more broadly, as a base for life sciences research, and in doing so weakened the UK’s ability to withstand US tariff pressure.

Brexit split what had been one regulatory system into two. Companies seeking to market medicines in both the EU and the UK must now secure separate approvals from the European Medicines Agency (EMA) and the UK’s Medicines and Healthcare products Regulatory Agency (MHRA). That extra step buys access to a UK market only a fraction of the size of the EU’s. Add to this UK-specific packaging and labelling rules, import requirements and customs formalities, and the commercial case for launching and supplying medicines in the UK weakens further.

The same calculus applies further upstream, to the development of new medicines. A company can use a single EU application to seek authorisation for a clinical trial across up to 30 European Economic Areas (EEA) countries, all under the same regulatory framework. Including UK sites means opening a second regulatory track, with a separate approval process and UK-specific regulatory requirements. This adds cost and can cause delay.

Predictably, the regulatory split has made the UK a less attractive destination for multinational trials. The number of industry clinical trials initiated in the UK fell sharply after 2017 and, despite a recent recovery, remained below its 2017 level in 2024. Patient recruitment has continued to fall. Each year, commercial trials bring billions of pounds of R&D spending into the country, generate income for the NHS, support tens of thousands of jobs, and help attract long-term investment in UK life sciences. Loss of trial activity therefore carries major economic costs and risks holding back growth in the life sciences sector.

In the post-Brexit years, the government’s strategy to restore the UK’s pull on the pharmaceutical industry was regulatory agility. Central to that strategy was reform of the MHRA: make it faster, more efficient, and more responsive to industry and innovation. New medicine authorisation routes were introduced, existing routes were modernised. The clinical trials framework underwent what was billed as the “biggest overhaul in trial regulation in 20 years.” The newly “sovereign” MHRA was meant to become a world-leading regulator, using greater agility to help turn the UK into a life-sciences “superpower”.

The reality has been more sobering. Brexit stripped the MHRA of EU-linked work and fee income, contributing to staff cuts and capacity pressures. Backlogs followed. The agency’s performance has since improved, aided by a £10m government funding boost, but the wider record remains mixed. New medicines are typically approved later in the UK than in the US and EU, while some of the recent gains in speed reflect the extent to which the MHRA relies, via the International Recognition Procedure, on decisions already taken by “trusted” overseas regulators.

The MHRA has thus not delivered on its promised agility. But even if it had, this would not have altered the fact that the size of the market to which the UK can offer access, and the scale of the opportunity it presents to the pharmaceutical industry, have both shrunk after Brexit. So too has the UK’s bargaining power.

That is the context in which the UK–US medicines deal should be understood. The UK faced US tariff threats alone, without the collective leverage of the EU, while still grappling with the regulatory and economic consequences of leaving the bloc. Moreover, major pharmaceutical companies warned that investment would move elsewhere unless the UK offered more favourable terms.

Brexit also exposed the UK to a form of pressure that EU membership had shielded it from. In the EU, trade policy is negotiated collectively while medicines prices are set at the member state level, so Washington cannot threaten an individual member state with tariffs to force concessions over what its health system pays for medicines. Outside the EU, that trade-off became possible.

The UK could, of course, have walked away from the deal. But walking away would have meant a further setback for an economy already under strain. Instead, it accepted terms that set the promise of new medicines against the NHS’s ability to meet other patient needs.

By Dr Vilija Vėlyvytė, Lecturer in EU Law, The Dickson Poon School of Law, King’s College London and co-editor of forthcoming book The UK Regulatory Framework Post-Brexit: ‘Law Unbound’.