Britain’s life sciences sector appears world-class. It boasts two pharmaceutical giants. AstraZeneca and GSK are global leaders. The country also has top-tier universities. However, a serious UK pharma investment crisis is now brewing. A bitter dispute over drug pricing is the cause. The government and industry relations have frayed badly.
Therefore, the state-run NHS buys most branded medicines. Its huge size grants massive buying power. A voluntary pricing scheme governs this. The latest agreement is called VPAG. It sets a cap on NHS drug spending. Moreover, companies must repay a percentage of sales. This repayment is a rebate or clawback. Health Secretary Wes Streeting shocked everyone. He set the rebate at a staggering 23%.
Furthermore, this decision triggered the UK pharma investment crisis. The industry trade body ABPI issued an immediate warning. It said this put a very real strain on companies. However, growth and investment are now at risk. The NHS spends less on medicines than peers. France and Germany allocate a much larger share. Negotiations have since completely collapsed.
Consequently, industry leaders are speaking out. AstraZeneca’s CEO Pascal Soriot is unhappy. He announced massive investment plans for the US. He called his company a very American firm. Reports suggest he considered moving its listing. Therefore, Pfizer’s UK president also criticized the rebate. He said it hurts global leadership ambitions. Merck’s general manager called it unaffordable.
Moreover, now Novartis’s UK chief has joined the criticism. He said Britain became largely uninvestable. This confirms the severe UK pharma investment crisis. The US political landscape adds more pressure. President Trump demands lower US drug prices. He argues American patients subsidize others. Companies may need higher prices elsewhere.
Therefore, drugmakers are taking action. Eli Lilly suspended UK shipments of a weight-loss drug. It plans a big price increase soon. This dispute has other unwanted side-effects. Companies may divert research spending to the US. They are also less likely to launch new medicines in the UK.
The government faces a difficult bind. It pledged to become a life sciences superpower. But its current policy risks driving investment away. The standoff threatens a vital national industry.
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