Despite what was presented as a “landmark” deal between the pharmaceutical companies and the government, the U.K.’s pharma association has not stopped pressuring the government for more industry-friendly spending policies.
Under new terms published by the U.K. government, branded drug companies that opt into a statutory scheme designed to control drug costs will pay rebates equal to 21.9% of sales in 2024, 24% in 2025 and 26.8% in 2026.
The Association of the British Pharmaceutical Industry (ABPI) argues the rebates are “at levels which have damaged the U.K.’s international standing with global life science companies.”
The new rebates are down from the 27.5% the U.K. demanded in 2023. Still, ABPI notes that 2023’s figure marked a record high and that the historical average is 10.6%.
The statutory terms come shortly after the U.K. and the pharma industry together touted a “landmark” arrangement for a new voluntary program that raises the maximum annual revenue growth allowed for branded drugs from 2% in 2024 to 4% by 2027.
The voluntary and statutory schemes together regulate drug costs under England’s National Health Service. Branded drugmakers are required to pick one to join. Even though the industry celebrated the voluntary deal two weeks ago, it’s still taking issue with the terms of the statutory scheme.
Back on Nov. 20, ABPI head Richard Torbett, Ph.D., said the voluntary scheme, by allowing the biopharma sector to grow faster, should “increase the U.K.’s international competitiveness over time.”
In a statement Tuesday, Torbett said the revelation of the statutory terms “sends a very confusing message to global life science investors.” The policy continues to cap the U.K. drug market below its natural growth level and undermines the country’s position among biopharma investors, he added.
The U.K. government asked for input on the statutory scheme between July 18 and Oct. 10. Since then, it has decided to abandon a new proposal called the “Life Cycle Adjustment,” which would impose higher rebates on older drugs and drugs that the government deems to be in less competitive markets. ABPI praised the move, saying that new mechanism was “unworkable and likely to result in low-margin branded medicines being withdrawn from the U.K. market.”
The U.K. government said it still intends to have the statutory scheme “broadly commercially equivalent” to the voluntary scheme. Because the consultation happened before the updated voluntary deal, the government will consult again in early 2024 to potentially amend the statutory plan.
“The government has consistently said it wants to support the international competitiveness of UK-based life sciences,” ABPI’s Torbett said. “To really make a difference, they should use next year’s consultation to unlock the constraints on growth which are impeding inward investment.”