The life sciences sector is that rarest of things: an area where the UK government has generally agreed with itself.
Reports have consistently espoused the importance of the sector and the UK’s strengths in terms of its leading universities, a strong research base, good skills and a centralised system in the NHS. The life sciences industrial strategy in 2017 laid out a “vision” to be a “global hub . . . for clinical research and medical innovation”.
The plan for growth (2021 version), after the industrial strategy’s demise, pointed to “globally-renowned clinical research and a unique cradle-to-grave healthcare system”. Clinical trials were highlighted as a Brexit opportunity. The 2021 life sciences vision (yes, another one) pledged to “cement the UK’s position as a science superpower”. Last week brought two more reviews — of pro-innovation regulation and clinical trials — plus a £650mn ‘Life Sci for Growth’ package.
Despite all these declarations of strength and significance, the system is in rehabilitation mode. The number of patients enrolled in commercial studies has fallen by 44 per cent since 2017, with a slide down the global rankings in terms of late-stage trials initiated. That is not the whole story: the UK switched completely from commercial activity to pandemic research during Covid-19 and has not managed to gear up again.
This is also a broader issue. The UK’s share of global pharma R&D has dropped sharply since 2012, from 7.7 per cent to 4.2 per cent in 2020. Manufacturing has fallen since 2015, according to the Association of the British Pharmaceutical Industry, along with exports.
Even by British standards of laurels-resting, rhetoric-heavy industrial policy, this is poor. It has not been a problem of diagnosis, or lack of ideas. But there has been what GSK boss Emma Walmsley calls an “execution gap”, in terms of the momentum and money behind key initiatives.
An overwhelmed, demoralised health system, particularly post-pandemic, has struggled to prioritise clinical trials, hence Lord O’Shaughnessy’s recommendation last week to tie direct financial incentives to participation in research. The health regulator has lost capacity and expertise, leading to long delays. Last week’s package, with a sprinkling of new money, was a step in the right direction.
But the truth is that sentiment towards the UK has also soured because of the commercial environment for medicines. The five-year voluntary rebate scheme, where companies return a portion of their sales to the health system to help control the overall drugs bill, jumped to 26.5 per cent this year compared to its usual single-digits. AbbVie and Eli Lilly have withdrawn from the scheme (a symbolic protest given the punitively high statutory backstop rebate). Lilly interrupted the government fanfare last week to say it was pausing investment in the country. AstraZeneca cited the scheme in its decision to build a $400mn facility in Ireland rather than the UK.
Of course, drug companies always moan about drug pricing. And the government makes the not-unreasonable point that the industry signed up to this scheme, including the possibility of such high payments.
But a reset is needed and negotiations are under way for a new agreement. “We need to see recognition within government that the commercial environment impacts investment decisions,” said Paul Blakeley from the Tony Blair Institute.
The industry has proposed a 6.88 per cent fixed rebate. That looks an optimistic jumping-off point for talks, with higher fixed rates around Europe, but reflects a better sharing of the risk of elevated costs than the current system. The chancellor was last week, as you would expect, still talking tough on financial pressures.
Other changes could help bridge the gap. The Association of the British Pharmaceutical Industry has suggested an additional industry-funded investment facility, so that funds go back into life sciences infrastructure and capacity. “We need to back up political rhetoric with practical levers to achieve strategic priorities,” said Blakeley, who separately suggests using a portion of rebate funds to incentivise take-up of innovative medicines at the local level, another area where the UK system has underperformed.
No more visions please. But tying payments to policy could help get everyone looking in the same direction again.