UK pharma industry urges reform of NHS drug pricing scheme

UK – The UK pharmaceutical industry has raised serious concerns about the current NHS drug pricing rules, saying they could limit patient access to new medicines and discourage future investment in the country’s life sciences sector.

Major companies like AstraZeneca, Pfizer, and Roche, through the Association of the British Pharmaceutical Industry (ABPI), have criticized the government’s pricing agreement, known as VPAG – the Voluntary Scheme for Branded Medicines Pricing, Access and Growth.

They argue that the agreement is placing an unsustainable financial burden on drugmakers. Under the scheme, companies are now required to return between 23.5% and 35.6% of their sales revenues from NHS medicines back to the government. This is a sharp rise from just 5% in 2021 under the previous deal.

Industry leaders say these rising rebates, which function like a tax, are pushing pharmaceutical firms away from the UK.

A new report from WPI Economics, commissioned by the ABPI, warns that if the current rules remain unchanged, the country could miss out on up to £11 billion in research and development investments by 2033.

The UK government sees life sciences as a key area for economic growth and innovation. However, industry experts argue that these goals won’t be met unless the government reforms the VPAG rebate system, which they say is far harsher than what’s seen in other European countries.

For example, similar clawbacks in France, Germany, and Spain are all under 8%. The strained relationship between pharmaceutical companies and the government is not new, but tensions have grown as companies pull back on investments.

British pharmaceutical giants GSK and AstraZeneca have long voiced concern over the UK’s business environment.

In January, AstraZeneca canceled its plans to invest £450 million ($584.96 million) in a vaccine manufacturing facility in northern England, citing reduced government support as the main reason for the withdrawal.

In response to these concerns, Health Secretary Wes Streeting has initiated a review of the agreement, acknowledging the need to balance patient access to advanced treatments with cost sustainability.

The Department of Health maintains that the agreement has saved the NHS billions of pounds while supporting rapid access to new, life-saving treatments.