Pharmaceutical companies executives have told a committee of MPs that doing doing business in the UK is “increasingly challenging.”
The Parliamentary Science, Innovation and Technology Committee held held a one-off evidence session to explore the decision by Merck - known as MSD in Europe - to halt its £1bn UK expansion, and what it means for investment in the UK’s life sciences sector.
When asked by the committee if actions on tariffs taken by the US administration had played a role in MSD’s decision, Lucas said: “It would be unfortunate for these topics [UK business environment] to be explained away as simply as a function of what is going on in the US. The UK commercial operating environment does need to be addressed and we find that difficult. And that is complete end-to-end, from development to commercialisation of our medicines.”
Confirming news that AstraZeneca’s plans for investments in Liverpool and Cambridge were on hold, AstraZeneca's UK president Tom Keith-Roach told the committee that the move had come as part of a broader review of its global investment footprint.
“On any metric the UK has one of the richest environments for research and drug discovery in the world,” said Keith-Roach.
“This is an industry in which investment is accelerating. We expect as an industry to invest $800 billion in R&D between now and 2030. By rights tens of billions of that investment should be flowing into the UK. But making the big bets on research that are required needs health systems and governments that value the innovation and allows our business models to be sustainable. The UK is an increasingly challenging place to bring forward that innovation to get through the front door of NICE and to the NHS. That part of the operating environment is increasingly challenging,” Keith-Roach added.
While both companies said that constructive discussions were taking place at the ‘highest levels of government,’ to address the issues being faced, Keith-Roach added “The issue of under investment in medicines has been a continued and worsening trend in the UK […] over the last 20 years and over the course of multiple governments. It is not a quick fix.”
The committee heard that investment on branded innovative medicines had declined by 10% since 2015, and efforts to change this was required. The businesses also raised concerns related to undervaluation of medicines, as the metric to evaluate their cost effectiveness had not changed since 1999. There was also a call for a long-term commitment from government to support the sector’s innovation.
Commenting on the government’s position, Minister for Science, Research and Innovation at the Department for Science, Innovation and Technology Lord Patrick Vallance said: “The crunch issue is the appropriate uptake, access, and payment on medicines which is causing an environment that the industry is finding difficult in the UK and is leading to many of reactions we are seeing. That is where the fundamental issue lies.”
When asked if it was simply a case of the UK paying more for medicines to support innovation Vallance said: “If you look at what has happened to the overall NHS spend on medicines, it has been in decline as a percentage of total of NHS spend since 2015. We need to reverse that decline, it is not just price. We need to get rapid uptake of the best new medicines, and have equitable access across the UK. The ultimate beneficiary needs to be the patients on one hand and the economy on the other.”
Commenting on the ongoing conversations between the government and business around the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) Vallance said: “The VPAG scheme, which was negotiated under the previous government, turned out with a figure of 23%, which was completely unexpected on both sides. The industry entered the scheme jointly with government, negotiated it and that is the number it came up with. We have been trying to negotiate a better position so that the industry gets more from that, and it's not hit with 23%. 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.”
VPAG is a UK agreement between the Department of Health and Social Care (DHSC), NHS England, and the Association of the British Pharmaceutical Industry (ABPI) to control NHS spending on branded medicines while supporting innovation and patient outcomes. VPAG includes industry payments to limit the growth of branded medicine costs.
Further reading
- GSK plans $30 billion investment in US R&D and manufacturing
- Life science investment benefits 'undervalued' warns report
- US pharma: Amgen joins growing list of big investors
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