That is according to proposals put forward by the Association of the British Pharmaceutical Industry (ABPI) with plans for a new medicines and pricing scheme - the Voluntary Scheme supporting Pricing, Access, and Growth (VPAG).
The report says: "Successive governments have recognised the importance of the industry to both growth and improving patient outcomes, as most recently articulated in the 2021 Life Sciences Vision. But the life sciences industry in the UK now stands at a crossroads. The current direction of travel is leading away from success and we must act urgently to reverse this trend."
In a dire warning of what could happen, the report goes on to say: "The UK is losing out in investments in manufacturing and research, clinical trial numbers are falling, and we risk NHS patients having to wait for, or not get access to, medicines available in Europe. The commercial environment facing companies operating in the UK is the significant driver of this decline, particularly the rapid rise in the revenue tax stipulated through the Voluntary Pricing and Access Scheme (VPAS) and the fallback Statutory Scheme."
VPAS is an agreement on pricing and rebates between the Government - through the Department of Health and Social Care (DHSC) as well as NHS England - and the ABPI and manufacturers or suppliers who signed up to VPAS. Under VPAS, there is an annual repayment rebate, which suppliers of branded medicines including branded generics, in vivo diagnostics, blood products, dialysis fluids, branded products supplied through tenders or central contracts and biological medicinal products (whether branded or unbranded) have to pay. The reason for the rebate is to enable growth in the medicines budget to enable more innovation and better health outcomes, but only up to a certain limit. If too much is spent on medicines, then the industry has to pay some money back through the VPAS rebate.
The report cites that as recently as 2021, the VPAS rebate meant pharma suppliers in the UK paid around 5% of their revenue back to the NHS as a sort of revenue tax. This rose dramatically to 15% in 2022 and an eye-watering 26.5% in 2023. This is totally outside of historical and international norms.
The report highlights how the current system has lacked predictability, as seen with the mushrooming 'tax' from 5% to 26.5% in just two years. Meanwhile, it has not optimised availability and adoption of new medicines, with use of medicines in the NHS three years after launch being 64% of other similar nations. In addition, the UK's share of R&D has declined, with manufacturing having shrunk and clinical trials down by 44% since 2017.
The report adds: "It is clear that the 2019 VPAS has become unfit for purpose. It is time for a more balanced approach and with the current voluntary scheme due to expire at the end of this year, the moment to create one is now."
The ABPI sets out its vision for a new VPAG comprising proposals that:
The ABPI then paints the sunny uplands, saying the proposals would deliver major benefits for the UK economy and the health of the population:
The ABPI concludes by looking to work with the Government and NHS to bring this to fruition.
There have been warnings recently from Mark Samuels, the Chief Executive of the British Generic Manufacturers Association (BGMA), that branded generics companies were having to withdraw products as the operating environment is simply unfeasible. Meanwhile, Leslie Galloway, Chair of the Ethical Medicines Industry Group (EMIG), warned that a survey showed that 50% of its members were reducing supplies of medicines in 2023 and a further 40% were discussing a reduction. Then, we heard that two big pharma companies - Eli Lilly and AbbVie - were leaving VPAS and would instead supply medicines on the statutory pricing scheme for branded medicines - which shows how unappealing the voluntary scheme has now become. David Watson, the ABPI lead responsible for strategy on the next VPAS/VPAG deal has recently warned that the current VPAS scheme was 'in crisis'.
The current VPAS scheme will end in December 2023, and the ABPI and Government are currently negotiating the new VPAG scheme from 2024, so there is a chance to reset the dial, as the ABPI is proposing. Industry is also getting positive mood music from the UK Government about the importance of a thriving life sciences industry to the UK economy and for the health and wealth of the country.
At the invitation-only PING Conference, which VWV is holding on 19 June 2023 in association with EMIG, we will be hearing about the impact of VPAS on suppliers of medicines, as well as the likely new VPAS/VPAG scheme, which will be in place from 2024. Presenters will include the ABPI's David Watson, Leslie Galloway and Mark Samuels.
Other themes at this year's PING Conference will include issues over regulatory approvals, skills and space.