Estimates Day debate: Spending of the Department of Health and Social Care on pharmaceutical procurement

On Tuesday 30 June 2026, there will be an Estimates Day debate on the spending of the Department of Health and Social Care (DHSC) on pharmaceutical procurement. The debate will focus on spending on medicines, following the UK–US pharmaceuticals trade arrangement published on 2 April 2026.

The topic for the debate was proposed by the Backbench Business Committee, on application from Layla Moran MP, Chair of the Health and Social Care Committee. Following the debate, the House will vote on whether to approve the Main Estimate for the Department of Health and Social Care for 2026/27.

What are the Estimates?

One of Parliament’s longest standing functions is the consideration and authorisation of the government’s spending plans, requiring the government to obtain parliamentary consent before spending public money.

Estimates, sometimes known as Supply Estimates, are the documents presented to Parliament setting out the government’s plans for spending for a given year. The process of obtaining parliamentary approval to those plans is known as ‘supply’. With a few specific exceptions, the government must obtain authority from Parliament through the supply process before it can spend public money.

Main Estimate for DHSC 2026/27

The Main Estimate for 2026/27 broadly reflects the Spending Review settlement allocated in 2025, but it does not include budget cover to meet the expected increase in pharmaceutical spending associated with the trade agreement with the United States.

What is the UK-US pharmaceuticals trade arrangement?

The UK–US pharmaceuticals trade arrangement was announced on 1 December 2025 and forms part of the broader UK–US Economic Prosperity Deal. It includes commitments on medical products supply chains, medicines spending, regulation and tariffs.

Under the arrangement, the US Government has agreed that it will not impose tariffs on UK pharmaceutical and medical technology exports for the next three years, until 19 January 2029. The UK Government has committed to increasing its support for the life sciences industry, and to increasing NHS spending on new medicines, from 0.3% of GDP in 2026 to at least 0.6% of GDP by 2036. In addition, by 2036, medicines spending overall should increase from 10% to 12% of the UK NHS budget.

How is the UK meeting its commitments under the arrangement?

To meet its commitments, the UK Government has made changes to its pricing scheme for branded medicines (known as VPAG, the Voluntary Scheme for Branded Medicines Pricing, Access and Growth). VPAG requires pharmaceutical companies in the UK pay a rebate to the government when their revenues from medicines sales to the NHS exceed a cap. Under the new trade arrangement, the UK Government has agreed that the maximum repayment rate cannot exceed 15% of eligible sales revenue.

Changes have also been made by the UK Government, through new regulations, to the cost-effectiveness thresholds used by the National Institute for Health and Care Excellence (NICE) when recommending new medicines for use in the NHS. The new thresholds took effect on 2 April 2026 and may enable some new, higher-cost medicines to be judged as representing ‘value for money’ by NICE and thus made available via the NHS.

What is the status of the arrangement?

The pharmaceuticals arrangement is not a treaty-based free trade agreement (FTA) under international law. It could be described as a flexible soft law instrument, which is not binding in international law, but comprises political commitments. This means the arrangement is not subject to parliamentary scrutiny under the Constitutional Reform and Governance Act 2010. The Secretary of State for Business and Trade, Peter Kyle, said that “non-FTA agreements” allow for flexibility in the current circumstances that the government aims to negotiate them “in a way that keeps [Parliament] genuinely informed”.

How will the arrangement affect the UK?

There is uncertainty about how the pharmaceuticals arrangement will affect patients, the NHS and the UK life sciences industry. The government has said it has no plans to publish an impact assessment for the deal because the information is commercially sensitive.

The pharmaceutical industry has welcomed the trade deal, saying it will support NHS patients and the competitiveness of the life sciences industry.

Some bodies have raised concerns about how the government’s new powers to direct NICE to change its cost-effectiveness thresholds may affect NICE’s independence. Campaign groups Just Treatment and Global Justice Now have asked the government to revoke the regulations, arguing that it has acted unlawfully. Patient and professional groups, however, have broadly welcomed changes to NICE methods on the grounds that they could increase access to new medicines through the NHS.

Costs and funding

The estimated cost of the pharmaceuticals arrangement for the UK has been disputed, and some commentators have raised concerns about how increased medicines spending will be funded. The government says the total cost will depend on how many new medicines NICE recommends but estimates it will be around £1 billion over the current Spending Review period.

In December 2025, the Financial Times reported that the Institute for Fiscal Studies (IFS) think tank had estimated additional costs of around £1.5 billion by 2028 (around £1.7 billion in 2028/29 prices) and £9.1 billion in 2036 (£13.3 billion in expected 2035 prices). The newspaper has queried how these figures square with the government’s £1 billion cost estimate.

The UK Government said that the additional costs incurred will be funded from existing NHS budgets and future funding will be determined at the next Spending Review in 2027.

Further reading

Commons Library, What is the UK-US pharmaceuticals deal?

Commons Library, US trade tariffs

Commons Library, What is a trade deal? UK-US trade talks since 2020

Commons Library, Deciding which medicines are used in the NHS

Commons Library, How are medicines prices set in the UK?

Commons Library, Medicines shortages