AZ halts UK investment, and Lilly, Sanofi follow suit

Last week will likely be remembered as the one in which pharma frustrations with the UK boiled over.

MSD's decision to pull back from a £1 billion ($1.35 billion) investment in the country was bad enough, but was swiftly followed by a report suggesting that the UK is tumbling down the rankings when it comes to attracting investment in facilities, R&D, and clinical trials.

Shortly thereafter, AstraZeneca was reported by Reuters to have paused a £200 million investment in its flagship Cambridge research campus, which was set to create 1,000 new jobs, having already pulled out of a £450 million vaccine facility project earlier this year. It has since confirmed the decision, which follows an announcement of a $50 billion investment plan in the US.

Eli Lilly, meanwhile, also revealed that it had paused work on its Gateway Labs biotech incubator – part of a £279 million agreement with the UK government last year – telling the Pharmaceutical Journal that it was waiting for "more clarity on the UK life sciences environment" before the project could go ahead.

Then, Sanofi – which had already slammed the UK as a "terrible place" to develop and sell medicines – told FirstWord that it was pausing any further investment in the country, although at the moment it has no projects in the pipeline.

The common theme for all companies that have pressed the pause button is the contentious issue of the process for medicines provided to the NHS, specifically the high rebates that the industry must repay via the Voluntary Scheme for Branded Medicine Pricing, Access and Growth (VAPG) and its accompanying statutory scheme.

Both rates have rocketed in the last few years, and negotiations between the industry and the government to rein them in broke down without agreement last month.

The government has insisted that it is "open to working collaboratively with the pharmaceutical industry", claiming that it has put forward "a generous and unprecedented offer as a part of the review of VPAG, which is worth approximately £1 billion over three years."

Minister of State for Science, Patrick Vallance, said in Parliament last week, during a debate that followed MSD's decision, that the government is working to reverse a decrease in NHS spending on medicines with its life sciences plan, claiming: "The changes we are making will continue to make this a place where people want to invest."

He also pointed out that the previous government and industry negotiated the VPAG, and that the rate for this year – around 23% - had been unexpected for both sides.

"We have been trying to negotiate a better position so that the industry gets more from that and is not hit with 23%," he told the House of Commons.

"That is the deal going on at the moment. We are trying to make the environment better for companies and to rectify something that ended up in the wrong place."

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