UK chancellor Jeremy Hunt has told drugmakers that the government has no “magic wand” to deal with financial pressures and was unlikely to give into industry demands to pay a significantly higher price for medicines.
The government will on Friday unveil reforms worth £650mn to boost the life sciences sector as part of a wider package of measures.
Drugmakers have condemned the government for this year increasing a tax on sales of drugs to the NHS to 26.5 per cent, from 5.1 per cent over the past two years. They have argued that low prices mean the UK will lose out on innovation investment.
The levy, or voluntary scheme for branded medicines pricing and access (Vpas), is designed to limit the NHS’s drugs bill.
The chancellor and other ministers met leaders of pharmaceutical companies, including AstraZeneca and GSK, on Thursday to discuss proposals to stimulate growth in the life sciences sector, which is worth £94bn to the UK.
Hunt said drugs manufacturers knew that prices paid for NHS drugs would remain lower than in other countries.
“[Pharma companies] recognise that the NHS will continue to get the cheapest prices globally for drugs because it is a single payer for one of the largest healthcare systems in the world.
“I’m very honest with drug companies that we don’t have a magic wand to deal with these financial pressures. Responsible public finances are absolutely essential if we’re going to have economic stability.”
Hunt said the government wanted to work with companies to find a “win-win” outcome as they negotiate an agreement on the NHS drugs bill for the coming years.
The announcement came as US pharmaceutical company Eli Lilly — which is developing innovative drugs for Alzheimer’s and obesity — said it is pausing a potential investment in London.
Eli Lilly said it was considering other locations in Europe because of concerns about a “stifling commercial environment” in the UK.
“In the short term, negotiating a new and sustainable pricing deal that unlocks the growth potential of our sector is key to restoring the UK’s international competitiveness and attracting future investment,” it said in a statement.
Ministers also unveiled £121mn of funding to revive commercial clinical trials conducted by the NHS, some of which has been previously announced.
The government also committed up to £250mn to incentivise pension schemes to fund the UK’s science and tech companies.
In a government-commissioned report published on Friday, former life sciences minister Lord James O’Shaughnessy made recommendations to address a dramatic drop in the number of commercial trials in the UK, including that GPs should be paid to participate in clinical research.
Hunt backed O’Shaughnessy’s goal to quadruple the number of patients in clinical trials by 2027. The government also accepted his recommendations to cut the time for approving commercial trials to 60 days, and to create a single contract for research across the whole NHS.
Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry, said the measures demonstrated that the government has listened to the industry.
But he added that improving research is “only one part of the equation”. “To get innovative medicines to patients and fully capture the growth opportunity, we must also fix the commercial environment.”