Over twenty pharma companies have rejected the UK government’s proposed changes to the statutory scheme for branded medicines, the latest move in an ongoing disagreement between the government and industry.
According to the Association of the British Pharmaceutical industry (ABPI), the “radical plans” are “unworkable”. And will be “highly damaging to UK life sciences and NHS patients’ access to medicines”.
The main concern is an arbitrary cap on growth in the UK branded medicines market, which has led to revenue clawbacks in the UK rising from around 5% to 27% in just three years.
Pharma companies and associations that are based or operate in the UK have now collectively rejected the plans, including Janssen, Lilly UK, Merck UK, Novartis, Pfizer, Roche Products and Sanofi, saying they will discourage innovation and investment in the UK.
In June 2023, a report by The King’s Fund found that the UK already spends less on medicines, has a lower adoption of new drugs and poorer health outcomes compared to other similar countries.1
Richard Torbett, Chief Executive, Association of the British Pharmaceutical Industry (ABPI), said: “We urge the government to slow down and take another look at these proposals before they press ahead and do real and lasting damage to the UK’s reputation as a global leader for life sciences.
“What all businesses crave is predictability. This allows companies to manage risks and invest with confidence. Yet these unpredictable capped pricing schemes have done the opposite. We need a pragmatic solution where industry and government can properly share the risks and rewards of innovation.”
The statutory scheme proposals
The statutory scheme operates alongside the 2019 voluntary scheme for branded medicines pricing and access (VPAS), which together control the cost of branded medicines to the NHS. It is designed to limit the growth in allowed sales of branded medicines.
Any company that supplies branded medicines is subject to the statutory scheme unless they join VPAS. Most companies choose to be part of VPAS, but the current scheme is due to end in December 2023, and without a new deal, all branded medicines sales will subject to the statutory scheme.
The Department of Health and Social Care (DHSC) has launched a consultation on the changes, stating that “It is necessary to reconsider the allowed growth envelope for the scheme so that we meet an effective balance between the three objectives of limiting the growth in costs of branded health service medicines, ensuring medicines are available on reasonable terms, and doing so in a way that is consistent with supporting both the life sciences sector and broader economy.”1
The DHSC also stated that it might be necessary to “rebalance” the payment percentages paid by medicines at different stages of the product lifecycle (lifecycle adjustment or LCA). The LCA aims to reduce rates paid by newer medicines, by imposing rates of up to 40% on medicines older than 12 years that are judged to be in “uncompetitive” markets.
The industry believes this will introduce even more instability to the UK market and be too imprecise and open to challenge, placing a considerable additional regulatory burden on companies.
Industry response to the proposals
The pharmaceutical companies argue the current high rebates make the UK a less attractive market for investment, and this will only be compounded by the suggested changes.
Russell Abberley, General Manager, Amgen Limited, commented: “Political leaders of all parties agree on the need for the UK to have a strong life sciences sector to support economic growth. However, the reality is that we are already witnessing a collapse in foreign direct investment in the UK life sciences sector. Government must act now to reverse a decline in investment and bolster its rapidly fading hope of being a life sciences power.”
In January 2023, AbbVie and Eli Lilly left VPAS in protest over what they described as “increasingly punitive revenue clawbacks”. The industry warned that if the UK cannot address rapidly escalating rates, investment, jobs and research partnerships will go to other markets.
Todd Manning, Vice President and General Manager, United Kingdom, AbbVie, said: “Unprecedented high payment rates in 2022 and 2023 have had a demonstrable impact on our ability to operate sustainably in the UK. It is therefore disappointing to see proposals for a Statutory Scheme which fail to deliver the sustainable, predictable, and internationally competitive foundation that companies need to rebuild commercial confidence.”
Susan Rienow, UK Country President of Pfizer, added: “The Statutory Scheme proposals signal that industry repayments to Government would be kept at unsustainably high levels into the future. This does not send a signal which would encourage the investment needed to be a global science superpower. We must now agree a new voluntary scheme which makes the UK internationally competitive, so the country can be home to tomorrow’s medical breakthroughs.”
Diana Spencer, Senior Digital Content Editor, Drug Discovery World
- The Kings Fund, ‘How does the NHS compare to the health care systems of other countries?’.
- Department of Health and Social Care, ‘Proposed review of the 2023 scheme to control the cost of branded health service medicines’, (Last updated 21 August 2023).