Pharma giants warn that UK risks losing £11 billion due to NHS repayment scheme
The Association of the British Pharmaceutical Industry (ABPI) has warned that the UK risks losing out on billions in investment by 2033 unless it reduces the amount of revenue the NHS claws back from pharmaceutical companies when paying them for medicine.
Currently, the UK operates an opt-in pricing control mechanism for medicine called the Voluntary Scheme for Branded Medicines Pricing (VPAG). This scheme aims to balance the revenue incentives of pharmaceutical companies against NHS patients’ access to new medicines by requiring companies to repay a percentage of revenue they make from the sale of branded medicines to the NHS above a capped amount.
This essentially limits the annual growth of the NHS’s expenses by containing the costs of access to branded medicines sold by multi-national pharmaceutical companies.
Citing a report by WPI Economics, which the ABPI commissioned and which is based on survey data from pharma companies, including ABPI members, the ABPI said that if the government does not reduce this repayment rate, the UK risks losing out on £11 billion of R&D investment by 2033.
The current cost control mechanisms implement a repayment rate of above 20% for newer branded medicines sold beyond a capped amount.
The ABPI is calling for this rate to be reduced to below 10% (which would proportionally increasing the effective cost paid by the NHS for branded medicines above the capped amount), which it said would prevent these loses in investment and is more in line with countries such as France and Spain.
The ABPI added that lower rates under 10% would also increase GDP by £61 billion over the next 30 years, according to estimates from the WPI Economics report.
“The UK will not realise its ambition and potential to be a global leader in health research if it continues to value the products of that research so poorly,” said ABPI chief executive Richard Torbett.
“This work sends a clear warning about the risk of doing nothing. However, it also shows the size of the prize if this government can address the policy failures of the past and work with industry to make the UK the home of life science innovation.”
The publication of the WPI Economics report comes as the UK pharmaceutical industry is lobbying fiercely to reduce the repayment rate outlined in VPAG.
Upon introduction of the scheme, the government said it aims to improve access to new medicines for NHS customers while keeping treatment bills sustainable and encouraging investment in the life sciences industry.
