The Association of the British Pharmaceutical Industry (ABPI) has urged the government to take urgent steps to reverse a decade-long decline in investment in life sciences and restore the UK’s position as a global leader.
In its pre-Budget submission, the pharma trade organisation stated that over the past ten years, the UK’s life sciences sector has seen a marked decline in investment and competitiveness.
Foreign direct investment in UK life sciences has fallen by 58 percent since 2021, while pharmaceutical R&D investment dropped by nearly £100 million in 2023.
To improve the situation, the ABPI wants the government to work with the Department of Health and Social Care (DHSC) to create the conditions for increased investment in innovative medicines and to improve the UK’s commercial environment.
The trade body said the immediate priority should be to address the low and outdated cost-effectiveness thresholds used by NICE, and reduce the UK’s high and unpredictable branded medicines revenue rebate rates under the Voluntary Scheme for Branded Medicines (VPAG) to single digits, as is the case in other European countries.
NICE’s baseline cost-effectiveness threshold has remained unchanged for over 20 years, meaning what the UK is willing to pay for new medicines has declined by 47 percent between 1999 and 2025.
Any change to NICE’s methods in the future would only affect the evaluation of new medicines/indications; it would not change the prices of medicines already approved and used by the NHS.
Increasing the threshold will also yield broader economic benefits by improving the UK’s competitiveness, enabling pharmaceutical companies to invest, conduct clinical trials, and engage in joint projects with the NHS.
The ABPI estimates that if the UK became more competitive, the country could recover between £2.2 and £3.4 billion of R&D investment by 2028, alongside major productivity and health benefits for the population.
The other recommendations include:
Maintain existing investment incentives: Protect the Patent Box, R&D tax credits, and full capital expensing, which are crucial to attracting innovation-led investment.
Update the Treasury Green Book methodology: Ensure the economic appraisal of medicines manufacturing fully captures transformational and long-term productivity benefits.
Restore the MHRA’s Trading Fund status: Give the regulator flexibility to plan and invest for the long term, supporting its role as a world-class, innovation-friendly agency.
Improve the Global Talent Visa’s competitiveness: Spread the cost of the Immigration Health Surcharge to reduce upfront barriers for top international researchers and specialists.
Ensure VAT is not applied to ‘Free of Charge’ medicines under early access schemes: Protect early access for UK patients and maintain the UK’s attractiveness for clinical trials.
ABPI chief executive Richard Torbett said, “The UK has the talent, science base and heritage to lead the world in life sciences, but right now we are falling behind.
“To change course, the Treasury and the Department of Health must work together to create the right conditions for investment in innovation. If we act now, we can restore the UK’s global standing, unlock billions in R&D investment, and deliver better outcomes for patients and the economy alike.”
It may be recalled that talks over reforming the VPAG scheme between the ABPI and the health department had ended in August after health secretary Wes Streeting gave an ultimatum to accept the government’s proposal.
But following the unprecedented industry backlash, science minister Lord Vallance told MPs in September that Britain needed to increase its spending on NHS medicines.
This year, three major companies, UK-based AstraZeneca and US pharma giants Eli Lilly and Merck, have either scrapped or paused their investments in the UK.
Last week, US ambassador to the UK Warren Stephens had warned that the American pharmaceutical giants would leave Britain if the Keir Starmer government failed to pay more for their drugs.
