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A deal with the Trump administration to pay more for new medicines will cost the health service in England an initial £1bn over the first three years, the government has acknowledged.

Lord Patrick Vallance, the science minister, confirmed that the Department of Health and Social Care would fund the extra spending out of its existing budget, prompting questions about whether the deal was value for money.

Costs are likely to increase further beyond the current spending review period as Vallance said that the UK government was “committed to accelerating spend on innovative medicines over the next 10 years”.

Last year the UK government agreed to increase spending on new medicines by 25 per cent by raising for the first time the threshold at which the NHS in England judges drugs to represent good value for money.

Under a deal struck with the US, Britain was exempted from pharmaceutical tariffs threatened by President Donald Trump, while ministers hope higher medicines spending will encourage investment in the life-sciences sector.

However, the deal has prompted disquiet in the NHS over whether other budgets would be cut to fund it, as industry presses for further increases in prices. The current DHSC budget is £202bn a year, of which £196bn goes to NHS England.

Jonathan Benger, the chief executive of the National Institute for Health and Care Excellence medicines watchdog, told the FT last month that he did not want to see further increases in the cost-effectiveness threshold, and that any move to weaken the role of Nice would be a “huge backward step”.

In a letter to MPs, Vallance said that internal government analysis had concluded “that the deal commitments will cost around £1bn in England over the remaining three years of the spending review”. Exact costs would depend on which medicines were approved and how much they were used, he said.

Wes Streeting, the health secretary, had been pressing the Treasury for extra cash to fund the deal, but Vallance wrote: “This deal will be funded by allocations made to DHSC at the Spending Review.”

He insisted that “front-line services will remain protected”, describing the deal as “a vital investment”. It remains unclear how the £1bn estimate squares with a promise in the US deal to lift British medicines spending from 0.3 per cent to 0.35 per cent of GDP by the end of 2028, estimated to cost about £1.5bn.

Costs are likely to build over time as more medicines are approved under the new threshold. The Office for Budget Responsibility has previously said that a 25 per cent increase in medicines spending could ultimately cost £3bn a year.

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Dame Chi Onwurah, chair of the Commons science and technology committee, said: “This deal carries a significant cost and it’s up to the government to ensure that it delivers significant return. It’s crucial that the benefits to UK patients outweigh the projected financial cost, particularly given the huge existing demands on the NHS. As the deal progresses, domestic health and life sciences policy must remain the priority — not the interests of US pharmaceutical companies.”

Layla McCay of the NHS Confederation said that health bosses would be “concerned” to see the money coming from DHSC budgets, with no clarity over what would be cut. “Against rising demand for care and huge pressure on all parts of the health service, any increases in medicines spending paid for through either NHS or DHSC central pots must not adversely impact the quality of health service provision.”