The pharmaceutical agreement between the UK and the United States was signed last year, but it has suddenly become politically controversial. Incoming Prime Minister Andy Burnham is under pressure to cancel or renegotiate it.
The broad bargain was straightforward.
- The United States granted UK pharmaceutical exports tariff-free access to the American market while agreeing closer cooperation on pharmaceutical supply chains and regulation.
- The UK agreed to increase spending on innovative medicines and reduce the rebates pharmaceutical companies are required to pay back to the NHS.
The deal has returned to the headlines because of a paper published in the British Medical Journal claiming that the NHS will have to divert £45 billion from essential services to pay for medicines under the agreement, leading to more than 200,000 avoidable deaths.
I have read a great deal of health economics over the years. This is one of the weakest pieces of health economics I have encountered for a very long time.
Not because the authors ask an unimportant question, but because they only answer half of it.
The claimed excess deaths are based on the authors’ estimate of the cost of the agreement and the assumption that no additional NHS funding will be made available. Every extra pound spent on medicines is therefore assumed to come directly from other NHS services, and those reductions are then converted into estimates of excess mortality.
There is an obvious problem.
The paper estimates the health costs of spending more on medicines but makes no attempt whatsoever to estimate the health benefits.
If the NHS gains earlier access to innovative cancer drugs, new dementia treatments or more effective medicines for chronic disease, those interventions will also save lives, reduce disability and improve quality of life. Whether those benefits outweigh the additional costs is precisely the question the paper should have addressed.
Instead, it measures only one side of the equation. The result is not an estimate of the agreement’s overall impact on public health. It is simply an estimate of one possible opportunity cost under a particular set of assumptions.
That is a much narrower conclusion than many of the headlines suggested.
But the omissions do not stop there.
The paper also ignores one of the principal reasons governments negotiate these agreements in the first place: investment.
The pharmaceutical industry is one of Britain’s most important high-technology sectors, employing tens of thousands of highly skilled people and generating billions of pounds of exports. Governments are not simply buying medicines; they are also competing to attract research, manufacturing and clinical trials.
That is why NHS pricing negotiations have always been contentious.
For years, major pharmaceutical companies have argued that the UK’s medicines pricing regime made the country a less attractive place to invest. During the most recent negotiations several companies paused, delayed or reconsidered planned investments while warning that the commercial environment had become uncompetitive.
Following the agreement, that picture has changed markedly.
AstraZeneca reversed its earlier decision to pause expansion, announcing a £300 million investment programme to complete the Rosalind Franklin building in Cambridge and construct a new “Lab of the Future” in Macclesfield. Moderna confirmed its £1 billion UK research commitment centred on Harwell. UCB announced a £500 million investment in a new research hub in Surrey.
The Association of the British Pharmaceutical Industry says that since the agreement was reached there have been 13 pharmaceutical investment commitments worth approximately £1.4 billion.
Whether every one of those investments resulted solely from the new agreement is open to debate. What is not open to debate is that pharmaceutical pricing influences investment decisions. Companies have been saying so for years, and governments of every political persuasion have taken those arguments seriously during negotiations.
None of these economic benefits appear in the BMJ paper. There is no attempt to estimate additional research spending, employment, tax revenues, exports or the wider economic effects of attracting pharmaceutical investment into the UK. But more importantly there are huge benefits to the NHS and to patients from having world class pharmaceutical research taking place in the UK
The paper counts the costs. It does not count the benefits.
In reality, none of this is especially new.
The NHS regularly renegotiates medicines pricing with the pharmaceutical industry. As the world’s largest purchasers of medicines, it possesses considerable bargaining power, but negotiations have always involved compromise.
The settlements reached over the years have balanced several competing objectives: obtaining value for taxpayers, ensuring patients have access to innovative medicines, maintaining Britain’s position as a world-leading life sciences economy and encouraging companies to continue investing here.
The UK-US pharmaceuticals agreement is unusual only because those negotiations became part of a wider trade agreement with the United States.
Behind much of the criticism lies an implicit assumption that reaching compromises with pharmaceutical companies somehow represents a betrayal of the NHS.
It does not.
The NHS depends upon pharmaceutical innovation just as pharmaceutical companies depend upon the NHS as the world’s largest purchaser of medicines. Their relationship has always involved negotiation, compromise and mutual dependence.
The more worrying issue is what this episode says about the way academic research is increasingly used in public debate.
A paper containing a deliberately partial economic analysis produces a dramatic headline. The headline is repeated across newspapers and social media. Very few readers—and apparently not every journalist—stop to ask whether the underlying methodology can actually support the conclusion being presented.
A few years ago Ben Goldacre published Bad Science and wrote extensively about how readers should assess research claims, recognise weak methodology and distinguish robust evidence from attention-grabbing headlines.
Those articles appeared in The Guardian.
It is a pity that some journalists seem no longer to follow the advice their own newspaper once championed.
https://www.thelancet.com/journals/lanonc/article/PIIS1470-2045(25)00721-1/abstract
https://www.gov.uk/government/publications/uk-us-arrangement-on-pharmaceutical-trade-and-pricing
https://www.bmj.com/content/394/bmj-2026-340588
https://www.theguardian.com/science/series/badscience