ABPI sets out new proposals to support the NHS and economic growth

The pharmaceutical industry’s offer includes an annual £1bn boost to the NHS as well as an additional £1bn new investment facility to maximise the potential of the UK’s health and life science ecosystem.

The Association of the British Pharmaceutical Industry (ABPI) has published the industry’s vision for a new agreement with the government which will deliver for patients, the NHS and the economy [1].

The industry’s proposals for a new Voluntary Scheme for Pricing, Access and Growth (VPAG) would deliver a sustainable approach to medicines provision while also maximising the potential of the UK life sciences industry as an engine for growth. They include measures to ensure rapid patient access and adoption of new medicines, as well as opportunities to improve health outcomes and productivity for the whole country.

The industry’s proposals fall into four key areas: restoring an internationally competitive commercial environment for life sciences; supporting UK clinical research and R&D; ensuring rapid patient access and uptake of new medicines; and improving population health and productivity through health innovation. Progress in all of these areas is essential if we are to meet the needs of patients and the NHS, and industry.

Among the proposals is a fixed rebate rate of 6.88% levied across all eligible NHS medicine sales to be paid by the industry. This would deliver over £1bn a year to the NHS – around £300m more than the average delivered under the old scheme before 2023, and comfortably more than the highest contributions ever made before the pandemic. Under these terms, the UK would return to a more internationally competitive position for attracting inward investment, yet the UK would continue to spend less on branded medicines than any comparable country, both in terms of per capita spend and as a proportion of total health spending.

In a world first, as long as we can agree an internationally competitive rate with the government, the industry also proposes that as part of such a package, they could agree to an industry-funded ‘Investment Facility’ worth over £1 billion over five years, to maximise the potential of the UK health and life sciences ecosystem as an engine for innovation-led economic growth.

The Investment Facility would be provided by a 1.5% premium on NHS sales paid by scheme members in addition to the scheme payment rate. The fund could be used to support key shared priorities like boosting NHS clinical trial capacity and delivery, expanding UK Genomics capacity, and building the UK capability to use real-world data to improve the speed, diversity and efficiency of recruitment into clinical trials. Such enhancements would strengthen the UK’s ability to attract the next wave of inward investment in life sciences.

The Investment Facility would also fund a Medicines Equity Partnership operating across the four nations of the UK. That Partnership would improve health outcomes and productivity for the whole country by addressing barriers that prevent the timely uptake of new medicines that have been approved by AWMSG, NICE and the SMC.

Another key proposal is for companies to commit to prioritising the UK as an early launch market, seeking a GB licence on new medicines in their first wave of regulatory filings. This would rely on a number of improvements to the UK’s regulatory approach to support rapid access to, and adoption of, new medicines and would enable the UK to regain and sustain its position as a ‘first wave’ country for new medicine launches.

Richard Torbett, Chief Executive at the ABPI said: “The life sciences industry in the UK stands at a crossroads. The current direction of travel is leading away from success and we must act urgently to turn this around. A new Voluntary Scheme for Pricing, Access and Growth provides the opportunity for a new settlement, placing the UK’s life sciences sector back on the path for future growth.

“Securing this vision will require a new mindset and approach from government, system partners and industry. It will require building on the partnership and trust forged during the pandemic. It will require learning from successes like the Vaccine Taskforce, recognising that real progress comes from drawing on the strengths and experience of both the public and the private sectors. Working together, we can create the conditions for innovative medicines to deliver their true value as an investment in the nation’s future health, wealth, and productivity.”

Today, the UK is losing out on investments in manufacturing and research, clinical trial numbers are falling, and there is a real risk NHS patients will be forced to wait for, or not get access to, medicines available in Europe.

The commercial environment facing companies operating in the UK is the principal driver of this decline, particularly the rapid rise in the revenue tax stipulated through the existing Voluntary Pricing and Access Scheme (VPAS) and the fallback Statutory Scheme.

As recently as 2021 the VPAS rebate meant companies paid around 5% of their revenue back to the NHS. But in 2022 it rose to 15% and in 2023 to 26.5%. This is completely outside both historical and international norms. It is clear that the current VPAS has become unfit for purpose and should not be renewed in its current form when it concludes at the end of 2023.

Work by WPI Strategy suggests that sustaining such high rates for another five years would result in economic scarring, with a total loss of £50bn to UK GDP by 2058 [2]. The long-term losses in tax revenue alone are forecast to be worth £17.9bn, around £5.9bn more than the levy would raise for the NHS. Retaining high rates even longer after 2028, up to 2033, would mean foregoing a further £90bn of GDP and £29.9bn in associated tax revenues up to 2058.

Alternatively, analysis by PwC demonstrates the scale of UK economic growth that could be delivered by the research-based pharmaceutical industry with the right conditions in place [3]. These benefits include generating an additional £68 billion in GDP over 30 years owing to increased R&D investment, a £16.3 billion boost to annual GDP from increased pharmaceutical exports, and 85,000 additional jobs from pharmaceutical exports, 7,230 additional jobs from greater foreign direct investment and 17,500 jobs from greater volumes of life sciences IPOs.

There is also a clear case for getting things right for the NHS and patients. Further analysis by PwC shows that increasing uptake across just four types of medicines (DOACs, SGLT2 inhibitors, severe asthma biologics and vasopressin V2-receptor antagonists) to the NICE recommended eligible patient populations, would deliver over a lifetime horizon 429,000 additional years of life in good health for patients, £17.9 billion in productivity gains for the United Kingdom, £5.5 billion of which would be paid directly back to the Exchequer through taxes [4].

Negotiations to agree on a new deal are due to start in the coming weeks, and the ABPI looks forward to working with the government to set the UK back on the road to becoming a global science superpower.