The UK is losing out to competitors in attracting investment in R&D, clinical trials, and capital projects due to a stubborn refusal to pay for innovative new medicines, according to the pharma industry.
A report on pharma competitiveness, published by the Association of the British Pharmaceutical Industry (ABPI), claims that the UK’s position for attracting foreign direct investment (FDI) fell from second in a 2017 report to seventh in 2023, with industry investment in R&D falling by 58% in the six years.
Over that period, the ABPI and its member companies have been incensed by steep increases in the rate that they must repay on sales of newer products to the NHS under the voluntary and statutory rebate schemes, which set a yearly cap on the total allowed sales value of branded medicines to the NHS each year.
Last month, Health Secretary Wes Streeting pulled out of talks seeking to end a deadlock on the rebates, accusing the ABPI of repeatedly delaying a decision on what he said was a “generous offer” on the table.
The report has emerged just as pharma heavyweight MSD abandoned a £1 billion ($1.35 billion) investment programme in the UK, two years after breaking ground on a brand new R&D facility in London, which will now be shelved.
In its report, the ABPI returns to the issue of the levy, saying that “high clawback rates on pharmaceutical companies’ revenues, at 23.5% on newer medicines in 2023, dampen investor confidence.” It points out that other European countries have much lower rates, such as 5.7% in France and 7% in Germany.
In addition, the UK spends a lower proportion of its healthcare spending on medicines than other countries, while fewer new medicines are made fully available to NHS patients for their full, approved indications. It also slipped down the rankings for hosting industry-sponsored phase 3 trials between 2017 and 2023, although, the report acknowledges “small signs of improvement” at the end of that period.
On the positive side are the UK’s strong academic institutions, “word-class” research infrastructure, generous spending on healthcare R&D, strong intellectual property protections, and a “rich ecosystem” of biotech companies that ranks top in Europe and third globally.
“I believe [the] UK has the potential to unlock billions in additional investment in early-stage R&D, ensure patients and the NHS can benefit from access to cutting-edge clinical trials, and attract major capital investment in R&D and medicines manufacturing facilities,” said ABPI chief executive Richard Torbett.
“But realising this potential requires industry and government working together to remove existing barriers and lean into areas of untapped strength,” he added. “First and foremost, we need to create a commercial environment that rewards pharmaceutical innovation fairly and brings its benefits rapidly to UK patients.”
The UK government laid out a plan in July to become the leading life sciences power in Europe by 2030, but pharma companies think that ambition will not be achieved without significant reforms.
“The UK has the key building blocks to be a life sciences powerhouse,” commented Russell Abberley, ABPI president and general manager of Amgen in the UK. However, he said the competitiveness report “lays bare the urgent, unresolved challenges we must overcome if our sector is to realise its full potential.”
Areas of opportunity for the country include tapping into the UK’s strong health data assets and expertise in AI, building on an already strong position in clinical testing of advanced medicines like cell and gene therapies, and continuing an ongoing effort to strip bureaucracy out of pharma licensing regulations.
Photo by Edson Rosas on Unsplash
