Inside the £64bn pharma deal that could cost more lives than Covid

It all started with a text sent in early 2025.

“We have a big problem coming down track re pharma tariffs.”

It was one of many messages exchanged between Peter Mandelson, then the UK ambassador to the US, and health secretary Wes Streeting.

“Trump thinks US pharma not being treated well, wants to put tariffs on EU and UK and force manufacturing to US,” Mandelson warned.

Streeting’s reply was succinct: “Urgh.”

The year that followed would see protracted talks between US and UK officials tasked with thrashing out a trade deal between the two countries. It would see a months-long standoff between the UK and Big Pharma. And eventually, it would see a controversial agreement between the two countries that has since remained shrouded in secrecy.

Away from the deal, the UK’s health service limped on under huge pressures. Data from the Royal College of Emergency Medicine shows that around 320 patients died avoidably every week in England because of delays in emergency care in 2024. Across the country, over 7 million people languished on NHS waiting lists.

The UK–US talks were marked by various warning shots towards the UK. The Trump administration raised the prospect of crippling tariffs. The pharma companies, whose profit margins were on the line, threatened to scrap major UK projects.

When an agreement was finally reached, the UK government said the deal would cost the NHS in England £1bn over the next three years. Experts say this is a fraction of the true cost.

As for the deal itself, it commits the NHS to spend more on expensive new medicines and also to pay more for drugs it is already buying.

It also affects how the assessments of new medicines will be made by NICE, the body that decides which drugs the NHS can purchase in England and Wales (Scotland and Northern Ireland are also informed by these decisions). This change in the NICE threshold means that some drugs will likely be approved that would previously have been rejected on grounds of cost-effectiveness – again taking money from the NHS budget.

NICE said: “Our decisions strike a balance between making innovative treatments available to patients and ensuring the best use of public funding.”

Agreements like this between the US and UK are vital in getting life-saving drugs to patients in the UK. But critics of the deal say that its funnelling of money away from hospital wards, A&E units and other vital forms of care will cost lives. In an open letter to Streeting, more than 200 experts, activists and health workers called the deal a “catastrophe” for all NHS patients.

They described the possible consequences as “tragic” and “shocking”.

Karl Claxton, a leading health economist who sat on NICE’s appraisal committee, led a team of researchers at the University of York to model potential outcomes. His findings are stark: “By 2033, the excess deaths from this deal will be greater than Covid.”

The official line is different. A government spokesperson disputed the calculations. The deal, they said, “is a vital investment that builds on the strength of our NHS and world-leading life sciences sector to increase access to lifesaving medicines without taking essential funding from our frontline NHS services”.

The Association of the British Pharmaceutical Industry (ABPI) dismissed the University of York research as “fundamentally flawed”. NICE said it is aware of the academic research on drug pricing, including work from York, and that it “takes such analysis seriously”.

“NICE continuously reviews and updates its methods to ensure they continue to represent best practice in health technology assessment,” it added.

But despite the deal’s immense public health implications, parliament has not been allowed to review the terms. Activists and journalists have been denied freedom of information requests for key details. Politicians’ questions have received no meaningful answers.

So how has the government been able to make a deal that bypasses democratic scrutiny – and what were its reasons for agreeing to it?

Inside the negotiations

In the weeks after Mandelson’s text to Streeting, the forces that would shape the negotiations, both domestic and international, quickly became clear.

First in the firing line was the UK’s medicine rebate scheme, which, in March last year, the ABPI said was making the country “uninvestable”. Under the scheme, the NHS agrees to a certain spending cap on branded medicines, and obliges pharma companies to return any overspend. (According to the ABPI, pharma companies would give back £13.5bn over four years under the current rules.)

Last summer, the pharma industry demanded a price increase of around £2.5bn a year through the scheme. Ministers rejected this, countering with an offer to put £1bn into the market over three years. Pharma said no. Streeting said he will not let patients be “ripped off” by pharmaceutical companies.

Across the pond, Donald Trump was attempting to force pharma companies to lower prescription drug prices in the US to levels seen in other affluent countries. In letters to 17 companies in July, he described wanting an “end to the free ride of American innovation by European and other developed nations”. He had already claimed American patients “subsidise” global drug development.

(Research by health economists shows that Trump is incorrect. Under current prices for new medicine, the UK already pays its fair share, meaning that pharma companies can cover the cost of research and development of drugs and still make a profit.)

In July last year, the US ambassador to the UK, Warren Stephens, met US pharma executives in London to discuss what he called the “challenges and opportunities of operating in the UK”.

Then, over the course of a single week in September, the dominoes began to fall. One company after another threatened to pull major UK projects: MSD scrapped a £1bn London research centre; AstraZeneca paused a £200m project in Cambridge; Eli Lilly parked a planned London lab. In response to concerns that the pharma giants had colluded in a bid to bump up drug prices, the Competition and Markets Authority said it had decided not to investigate.

A fortnight later, AstraZeneca threatened to quit the London Stock Exchange and move to the US.

By late September, pharma CEOs were testifying in front of a House of Commons committee to answer questions about their halting of UK investment. Their message was clear: the NHS needed to pay more for their medicines.

Patrick Vallance, the science minister within the Department for Science, Innovation and Technology (DSIT) and former R&D chief at GSK, was overseeing negotiations. He confirmed in October that the UK government was now ready to make the NHS spend more on branded drugs.

Still the US remained bullish: a month later, Stephens insisted US pharma companies would “shut down” their sites in the UK if the NHS did not cough up.

By December, the deal was done.

Claxton’s reading of the situation is simple. “The government faced a clear choice,” he said, “either back the NHS and adult social care and stand up to these pressures, or don’t. And it decided not to.”

The real costs

Ministers have spun the deal as a victory: zero US tariffs on UK pharmaceuticals, economic growth, investment and jobs that “reinforce the UK’s position as a life sciences superpower”. The pharma lobby association called it “good news for NHS patients”.

The details remain opaque. When asked what figure the pharma industry would or did accept as part of the negotiations, the APBI said it “does not discuss the details of confidential industry discussions with the government”.

NHS England told us it has a dedicated team that negotiates confidential commercial agreements with pharmaceutical companies to further safeguard value for money for the public.

Lord Vallance says the deal will cost NHS England £1bn over the next three years. And even if that costing was taken at face value, Claxton argues, that billion pounds could be put to better use. “The best way to spend it isn’t to give it to pharma,” he said. The best way to spend it is to increase the NHS or adult social care budgets.”

But he says the figure Vallance gave should be closer to £3.3bn. And the true cost of the deal for the whole of the UK – once you factor in the government’s commitment to double pharma spending by 2036 – will be far, far higher: nearly £64bn.

These figures will have drastic real-world effects. His team predicts that an additional 330,000 people in the UK could die by 2036 as a result of the deal drawing money away from other parts of the NHS – more than the excess deaths in the first two years of Covid.

A government spokesperson told us Claxton’s numbers “are based on assumptions and projections that the government does not share and do not reflect how decisions on medicines funding and access are made in practice.”

Mathew Hulbert, a former councillor from Leicestershire, does not need complex modelling to understand the cost of an underfunded NHS. In July 2022, his 78-year-old mother fell and hurt her ribs at home. As she lay on the floor in pain, he called 999 and was told not to move her. “It was the worst 11 hours of my life,” he remembers. His mother was taken to hospital but died two days later.

Mathew later learned the reason for the delay: ambulances were stacked up outside Leicester Royal Infirmary, unable to offload patients because wards were already full. “It was a whole-system failure,” he said.

Mathew’s story is one of thousands that show how NHS cuts can mean the difference between life and death. Critics of the pharma deal fear that the extra money committed to new medicine will only deepen the crisis.

Independent experts we spoke to said the deal will affect every NHS patient, from increased mortality and reduced survival related to cancer, respiratory and gastrointestinal diseases, to reduced quality of life for people with neurological, endocrine and mental health problems.

There is also a question over whether some of the new drugs being bought for premium prices are a better use of money than older, tried-and-tested treatments.

Research shows that a number of everyday NHS treatments – such as flu vaccines, blood pressure drugs, rehab exercises for lung disease – deliver effective healthcare at a fraction of the cost of newer branded medicines.

Secrets and lives

Despite the fact that the deal will have a huge impact on NHS spending and patients’ access to medicine, the government has refused to release key details about what it has actually agreed to.

We sent freedom of information requests to both the Department of Health and Social Care (DHSC) and DSIT asking for a copy of the deal’s impact assessment. Both departments refused to hand it over.

DHSC said that releasing the information could undermine the UK’s negotiating position and damage future “commercial relations with the pharmaceutical sector”. DSIT, meanwhile, confirmed the existence of an unpublished annex to the impact assessment but said it will not make it public due to “international relations”.

“We’re not allowed to see it because it might upset Donald?” said Scottish National Party member of parliament Seamus Logan on hearing about those denials. “That’s appalling. That’s absolutely appalling.

“There has been absolutely no parliamentary scrutiny of the workings of this deal to date, and there absolutely must be,” he said. “We need to know what the cost of this deal really will be.”

Nick Dearden of the nonprofit Global Justice Now said: “When it comes to a piece of domestic policy regulation like NHS price controls, I find it extraordinary that the public or parliamentarians are not allowed to see their calculations.”

When we asked the Scottish government about the deal, it told us it was “given no role in the process – despite the clear impact on Scotland and our NHS”. While it said that the deal should also help drive investment, it also said it believes the UK government has made substantial concessions.

Since the deal was announced there was a growing concern among Labour, Liberal Democrat, Green and SNP MPs about the details of it and what it will cost the NHS.

The Lib Dems have called on Keir Starmer to cancel the “Trump tax” on the NHS and invest in fixing social care instead. “We are very, very, very, very nervous that money will be diverted from frontline services, where we already have a crisis situation,” said Helen Morgan MP.

She added that she is “concerned about any kind of deal with the US, because Trump hasn’t stuck to previous deals”. In fact, although the UK and US have signed up to the deal, it is not legally binding under UK and international law. This means that the agreements made around UK exports to the US are subject to change, including the zero tariffs.

It appears the Americans are happy. US health secretary Robert F Kennedy thanked Trump for “delivering results that put Americans first” and secretary of commerce Howard Lutnick said the deal would mean “the breakthroughs of tomorrow will be built, tested and produced on American soil”.

As for the pharma companies who threatened to leave the UK, they haven’t yet committed to stay. AstraZeneca and Bristol Myers Squibb did not respond to our questions. The latest from Eli Lilly, which had hit pause on its London lab project, was that the confirmation of the deal was encouraging and that the company will “revisit our investment plans there as the environment improves”. Or, in other words: not yet.