As Streeting threatens no deal, talks on drug levy collapse
Rt Hon Wes Streeting MP, Secretary of State for Health and Social Care
After UK Health Secretary Wes Streeting sent a letter to the pharma industry, warning that he would withdraw from negotiations on rebates paid by industry on NHS medicines if an agreement was not reached today, the talks have collapsed.
The Financial Times reported this morning that Streeting had accused the Association of the British Pharmaceutical Industry (ABPI) of "repeatedly" delaying a decision on the negotiations and what he described as a "generous" offer, threatening to pull out of talks by 12pm. Now, the trade organisation has confirmed that they have been abandoned.
The ABPI and its member companies have been incensed by steep increases in the rate that drugmakers must repay on the sales of newer products to the NHS under the voluntary and statutory schemes, which set a yearly cap on the total allowed sales value of branded medicines to the NHS each year.
Sales above the threshold are paid back to the government via rebates, but the rate has risen sharply this year.
In June, the ABPI said the rebate via the statutory scheme will rise to 31.3% in the latter half of this year from 15.5% in the first half, bringing the average increase to 23.8%, with the expectation that the rate next year will reach 24.3% next year and 26% in 2027.
The voluntary rate, meanwhile, was 22.9% this year, and the rate for 2026 and 2027 was the subject of the negotiations. In a statement, the ABPI said that "despite good faith and best efforts on both sides, industry and government have not been able to reach an agreed way forward."
It said the voluntary scheme will now require pharmaceutical companies to make record payments of up to a quarter to a third of revenues in sales of branded medicines to the NHS, and efforts to return the rate to historic, single-digit levels have failed.
It also said the two sides were unable to "address the way in which [reimbursement authority] NICE fundamentally values innovation, for which the standard decision-making parameters have not changed for almost a quarter of a century."
Most drugmakers opt for the voluntary rebate scheme, although massive increases in the rebate in the last few years have prompted some to opt out and switch to the statutory scheme in protest.
It has already been speculated that AstraZeneca's termination of a plan to invest £450 million in a new vaccine manufacturing plant in the UK came about in part because of the big increase in the voluntary rate. Since then, the ABPI has said the medicines levy had made the UK "un-investable," undermining government efforts to maintain life sciences as a key growth sector for the national economy.
The organisation has previously called for the allowed growth in the schemes to be adjusted to reflect recent increases in NHS funding, and linked to future adjustments each year based on the latest planned NHS budget.
"While this review has concluded without reaching agreement, the issues it was set up to resolve remain unaddressed and continue to demand urgent action," said ABPI chief executive Richard Torbett.
"We need to reach a solution that improves patient access to future innovation, allows the sector to fulfil its growth potential, and does not require industry to pay back nearly three times as much of its revenues as is required in other European countries."
Research (PDF) commissioned by the trade organisation has claimed that, if rates stay above 20%, the UK could lose out on £11 billion ($14.8 billion) of R&D investment by 2033. However, should they be maintained below 10%, that could increase GDP by £61 billion over the next 30 years.
