Robert Albarano and Ben van der Schaaf, partners at Arthur D. Little, explain that while the US-UK drug deal will increase what the NHS pays for branded medicines, it will also offer a chance to reset the UK’s value proposition to innovators.
By late 2025, it had become clear that pharmaceutical investment in the UK was nearing an inflexion point. Major companies had cancelled or paused more than £1 billion of planned investment, including Merck’s £1 billion research centre in London and AstraZeneca’s £200 million expansion in Cambridge. At the same time, voluntary pricing schemes designed to balance access with affordability required manufacturers to pay back a large share of their UK sales through rebates, even on new medicines. As a result, pharmaceutical companies were starting to treat the UK less as a priority market and more as a difficult outlier, raising the risk that the UK would combine world-class science with weakening incentives to develop, launch, and manufacture innovative treatments there.
On 1 December, the US and UK announced an agreement in principle on pharmaceutical pricing. The deal keeps tariffs on UK medicines entering the US at zero for at least three years and shields UK pricing from specific US trade actions linked to most-favoured-nation policy. In return, the UK has committed to increasing what the NHS spends on new medicines by about 25%. This is to be achieved through higher cost-effectiveness thresholds at the National Institute for Health and Care Excellence (NICE) and revisions to key parts of the pricing and reimbursement system. The agreement is a significant shift, but it remains a political understanding rather than a finished rulebook.
A clearer set of rules
In recent years, companies have faced a commercial environment in which list prices and mandatory rebates have sat on top of a valuation framework based on quality-adjusted life-years (QALYs), whose core assumptions have changed little in more than two decades. If implemented as described, the new agreement would allow government and industry to move away from that crisis-prone model toward a clearer set of rules. The current opportunity is to use this external deal as the basis for a durable domestic framework. Building on it, the UK government should set clear boundaries on future rebate requirements and introduce regular, evidence-based reviews of cost-effectiveness thresholds. It should also link higher prices to something concrete. Rather than focusing only on prices, policymakers should commit to long-term cost-effectiveness reassessments using NHS data so prices and access conditions reflect actual outcomes.
The UK also holds advantages that few other countries can match. A single-payer system with large longitudinal datasets, a respected health technology assessment body, and a network of elite universities and teaching hospitals already gives the UK an enviable base. AI now offers tools to analyse those datasets at scale, helping identify cohorts for trials, target treatments more precisely, and generate real-world evidence on safety, outcomes, and utilisation. These are the capabilities that long-term, real-world cost-effectiveness reassessments require. If the UK can demonstrate that it is the best place to generate and interpret such evidence, it can turn its scientific and data strengths into earlier access for patients, better outcomes, and a stronger case for long-term life sciences investment.
A starting point
Realising this potential will require investment in people and local capability, not just technology. NHS trusts and integrated care systems need analytical and digital teams that can join platform trials, build registries, and generate the real-world evidence the wider system requires. They also need to treat data quality and coding as strategic priorities because weak data will undermine any attempt to assess long-term value or deploy AI safely. Clinicians need protected time for research, data, and service redesign alongside immediate operational pressures. National policy already points in this direction, from the UK Life Sciences Vision to the roll-out of secure data environments and clinical research reform. The question is whether those strategies will translate into visible change on the ward, in the clinic, and in the pharmacy.
For readers of Healthcare Today, what happens next will be shaped as much by decisions inside the health system as by trade policy. Hospital leaders and integrated care systems can decide whether research, data partnerships and pathway redesign are treated as core infrastructure. Clinical teams can determine how completely outcomes and utilisation are recorded and whether tools that free time for direct patient care are adopted. Together, these choices will influence both the UK’s appeal to life sciences investors and the speed with which patients see the benefits of innovation.
If the country uses this agreement as a starting point for a domestic framework that combines predictable pricing, long-term value assessment, and serious investment in data, AI, and research, it can move from stalled investment to competing again as a place where life sciences innovation is developed, tested and delivered for patients.
