Government proposals to overhaul a branded medicines price clawback scheme aimed at limiting annual growth in NHS spending will damage life sciences investment, a manufacturers’ trade association has claimed. 

The Association of the British Pharmaceutical Industry (ABPI) put out a statement this week after the Government published a consultation on its proposals to review the statutory scheme for branded medicine pricing. This is one of options for manufacturers alongside the voluntary scheme VPAS, which is currently being renegotiated.

The Government is proposing that the current cap on NHS medicines spend growth each year should be lifted from 1.1 per cent to 2 per cent. It is also proposing to introduce a temporary 36-month exemption for medicines containing a new active substance – a measure that would align the statutory scheme with VPAS.

However, the ABPI warned that Government plans to increase the clawback rate year-on-year reaching 26.6 per cent in 2026 – significantly higher than the average pre-pandemic rate of 9.4 per cent – will damage “industry confidence in the UK as a viable place to research, launch and supply medicine”.  

It pointed to Government data showing that UK life sciences foreign direct investment (FDI) fell by £900m between 2021 and 2022, a 47 per cent reduction.

“The Government’s proposals also include specific new ultra-high clawback rates for the majority of branded generic and biosimilar medicines, at a time when these companies are already urgently warning that the commercial environment is threatening the security of medicines supply,” the ABPI added.

Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry, said: “The UK already spends less on medicines than all comparable countries and as a result has consistently worse health outcomes for avoidable and treatable conditions.

“These proposals will set back any ambition to make the UK the best place in the world to research, launch and supply medicines. Government data shows that when clawback rates rise, inward investment falls – along with the economic growth and jobs such vital investment delivers.

“Ultimately, if we want a vibrant UK life sciences industry, we need all parts of the medicines market to be sustainable. No part of the market should be crushed under the weight of a punitive tax on revenue.”

The Department of Health and Social Care said in the consultation document: “The Government remains firmly committed to working with the pharmaceutical industry to create an environment that facilitates the development of medicines in the UK and supports rapid patient access to innovative medicines for NHS patients.”