As drug pricing tensions flare on both sides of the Atlantic, two U.S. pharma heavyweights are walking away from a long-held cost and access scheme with the U.K.’s National Health Service (NHS).
AbbVie and Eli Lilly have exited the U.K.’s Voluntary Scheme for Branded Medicines Pricing and Access, a government-industry accord that traces its roots to NHS’ formation, according to local trade group The Association of the British Pharmaceutical Industry (ABPI).
The move, which was prompted by a recent spike in government repayment rates, should send a “warning signal” to the U.K. that pharma companies may be unwilling to shoulder “increasingly punitive revenue clawbacks,” ABPI said in a release.
The exodus shouldn’t come as a total shock. Back in December, ABPI and a host of major drugmakers clapped back after the British government revealed that manufacturers of branded medicines would have to return almost 3.3 billion pounds sterling in revenue—or 26.5% of sales—to the government in 2023. The repayment rate stood at roughly 0.6 billion pounds in 2021 and 1.8 billion pounds in 2022, ABPI said late last year.
“This unsustainable high levy on our revenue means that companies like AbbVie are having to make incredibly difficult decisions on our investment in the UK in terms of R&D, highly skilled workforce and our partnerships with the NHS,” Todd Manning, AbbVie’s general manager in the U.K., said in a statement at the time.
ABPI blames the jump in 2023 repayment rates on “failings in the existing scheme’s design." The group argues the pricing accord puts the U.K. “completely out of step with its global competitors and outside historical norms.”
Should the U.K. fail to address those “rapidly escalating” repayment rates in the coming years, the industry has warned that the U.K. could hamstring its own life sciences goals and send companies and investors packing.
This isn’t the first time AbbVie has decided to shake up a longstanding arrangement in recent months. Across the pond in the U.S., AbbVie late last year said it would leave the trade organizations the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO), plus the Business Roundtable.
The exact rationale behind the big pharma’s departure wasn’t immediately clear.
“We regularly evaluate our memberships with industry trade associations and our most recent assessment led us to decide not to renew our membership with select trade associations,” an AbbVie spokesperson told Fierce Pharma over email at the time.
Meanwhile, outside the U.K., new pricing regulations will soon become a thorn in the side of drugmakers in the U.S. Stateside, trade groups and drugmakers alike have largely rallied against the passage of Democrats’ Inflation Reduction Act this past summer, which will empower Medicare to haggle over certain drug costs, among other provisions.
AbbVie's CEO Richard Gonzalez has been a vocal critic of the legislation, arguing that the planned price negotiations are more akin to "price controls."