The UK could lose out on £11 billion in pharmaceuticals research and development (R&D) investment by 2033, and see fewer new medicine launches in the NHS, unless very high and unpredictable medicines sales clawbacks are addressed, according a new report
In the UK, a medicines pricing control mechanism, known as the Voluntary Scheme or VPAG, now requires companies to pay the Department of Health and Social Care (DHSC) up to a quarter to a third (23.5 per cent-35.6 per cent) of their UK revenue from sales of branded medicines to the NHS.
In a new report,’ WPI Economics looked at a subset of R&D activity in the UK and modelled the impact of prolonged high medicines payment rates.
The report showed that if very high new medicine payment rates of above 20 per cent of companies’ UK revenue continue, the UK could lose out on £11bn of R&D investment by 2033.
However, if new medicine payment rates are returned to pre-2023 levels of below 10 per cent, such losses can still be avoided, the report found.
Lower rates under 10 per cent would also increase GDP by £61bn over the next 30 years, delivering increased tax revenue of around £20bn, according to WPI Economics’ calculations.
The authors suggest that both these losses and gains could be even larger once the full range of life science investments in the UK is considered.
Matthew Oakley, Founder and Director, WPI Economics, said: “The burden of such high repayment rates on company revenues has clearly become an obstacle to growth in life sciences.
“The system risks generating poorer outcomes for patients and making health inequalities worse.
“Addressing this issue is critical in supporting the government’s number one mission to deliver economic growth.”
