Ministers planning drug pricing shake-up to stem pharma exodus
Ministers are drawing up a radical overhaul of NHS spending rules in a bid to shore up the UK’s world-leading life sciences industry after a string of pharma giants cancelled major UK investment projects.
In what would amount to one of the largest shake-ups of NHS drug purchasing rules in recent history, the Prime Minister is poised to lift a price cap in place to determine which medicines are deemed cost effective for the taxpayer.
According to Politico, officials are pulling together a plan that chiefly includes raising the National Institute for Health and Care (NICE) threshold – the main benchmark for whether a treatment offers good value for what is public money – by as much as 25 per cent.
Under the current rules, which mean the UK pays the least for its medicines of any major economy, if a drug costs taxpayers more than £30,000 for every year of good-quality life it delivers to a patient, it is not considered good value for money.
The overhaul is widely being seen as an attempt to protect the UK’s position as an eminent hub for the pharmaceutical and life sciences industries, which are under assault from a combination of the looming threat of punitive tariffs from the White House and a dearth of investment.
Several pharma giants have either paused or cancelled major capital expenditure projects in recent months, including American behemoth Merck, which last month halted work that had already begun on its flagship £1bn drug research centre in King’s Cross.
More recently, London-listed pharma giant GSK unveiled a $30bn (£22.4bn) investment in the US – widely viewed as a snub to Britain. And the chair of Astrazeneca, the UK’s second largest listed company, said it was weighing whether to pause all its UK plans until the government changed its “appalling” drug pricing regime.
Ministers at loggerheads over source of pharma funding
Simultaneously, pharma giants have been contending with a barrage of criticism from US President Donald Trump, who accused them of abusing the US’s more generous pricing rules to discount drug prices in other European economies.
The President has unveiled tariffs of some 100 per cent on drug imports unless the company that makes them has broken ground on a project to build manufacturing plants or factories in the US.
Last month, science minister Patrick Vallance, a former executive at GSK, said lifting the price cap on drugs was “going to be a necessary part” of stopping the exodus of pharma investment.
But government departments are at loggerheads over where the billions of pounds that would be needed to fund the uplift would come from. According to The Times, NHS executives are resisting pressure for it to come out of their budgets, which were handed an historic increase at this year’s Spending Review, while Treasury officials are arguing there is no scope for additional tax rises on top of those already necessary at next month’s Budget.
A government spokeswoman said: “The pharmaceutical sector and the innovative medicines it produces are critical to our NHS, our economy and the plan for change.
“Through our Life Sciences Sector Plan, we’ve committed to working with industry to accelerate growth in spending on innovative medicines compared to the previous decade.”