Pharma industry group unhappy with NHS drug pricing offer

The Association of the British Pharmaceutical Industry (ABPI) has rejected the UK government’s offer to cut the cost of NHS drugs pricing scheme as it felt it was inadequate.

The industry group warned that £2 billion of potential investment could be under risk and wanted prime minister Keir Starmer to intervene, The Times reports.

The ABPI has called for the five-year agreement reached with the government in late 2023 to be fixed because companies cannot afford the record rebates they are paying to the NHS.

The group also expressed concern over the government’s commitment to the US president Donald Trump’s administration, and how it could affect the pharma sector in the UK.

The US president had last month signed a broad executive order directing drugmakers to lower the prices of their prescription drugs to align with what other countries pay.

He has been critical of the pharmaceutical industry over the price of medicines in the United States and accused other wealthy nations of "freeloading" on US pharmaceutical innovation.

The association said the shelving of potential investment could even mar the UK-US trade talks, as the UK’s failure to invest in pharma sector will not be taken kindly by the US.

The government had made the offer after an eight-week “sprint” consultation, after a meeting of global bosses in Downing Street, to reform Vpag, the voluntary scheme for branded medicines, pricing, access and growth — a five-year pricing agreement struck in 2023.

The scheme includes a cap on the total sales of newer branded medicines to the NHS, above which sales are subject to repayment.

It is designed to make NHS drug expenditure predictable while encouraging the industry to innovate.

The industry had said that Vpag is forcing them to pay between a quarter and a third of revenues from drug sales in the country back to the NHS.

That percentage is up from around 5 per cent of revenue that companies paid in 2021, under a previous agreement.

In the letter to Starmer, the industry said it was “deeply disappointed that your government has been unable to put forward meaningful proposals for a change of policy, despite all previous commitments in public and private”.

The government’s offer would not “increase the UK’s attractiveness as a life sciences investment hub” and the letter urged Starmer to “intervene personally”.

The Labour government had identified the life sciences as one of eight key growth sectors as part of its upcoming announcement on industrial strategy.

The relations between the UK pharma industry and the government over the scheme and other policies have long been contentious.

Drugmaker AstraZeneca had in January scrapped plans to invest £450 million in its vaccine manufacturing plant in northern England, citing a cut in government support.