AbbVie and Eli Lilly have left the UK’s Voluntary Scheme for Branded Medicines Pricing and Access (VPAS), according to an update by the Association of the British Pharmaceutical Industry (ABPI).
The companies will now come under the alternative statutory scheme imposed by the government through law, demonstrating what the ABPI describes as ‘the depth of feeling that the current voluntary scheme is damaging the UK life sciences industry’.
Introduced in 2019, the VPAS deal is a long-standing agreement between the government, NHS and medicine manufacturers, designed to limit the cost of drugs for the health service while also supporting industry innovation.
The scheme caps the growth of NHS branded medicine spending at a nominal rate of 2% per year, with the industry returning any spending beyond the cap in the form of a levy.
However, companies are increasingly arguing that it is no longer possible to justify the voluntary scheme to global boardrooms and investors.
In December, the government announced that those within the voluntary scheme would be required to return almost £3.3bn in sales revenue – 26.5% of sales – up from around £0.6bn in 2021 and £1.8bn in 2022.
Speaking about the levy, Todd Manning, general manager UK, AbbVie said: “Levy rates close to 27% of revenue are not seen in any comparable country and they have a demonstrable impact on our ability to operate sustainably in the UK.”
The ABPI warned that if the UK is unable to address rapidly escalating rates in future years and repayment rates return to ‘historical norms’, the UK will increasingly see investment, jobs and research partnerships going to other, more supportive markets in the US, Europe and Asia.
Laura Steele, Eli Lilly’s president and general manager, Northern Europe, said: “We simply cannot stay signed up to a scheme that has such a punishing impact on innovation, which is why we want to see action on a new settlement that allows life sciences to thrive in the UK now and over the long term, to boost investment in the UK and ensure patients here can benefit rapidly from cutting-edge clinical trials and medicines.”
The current voluntary scheme is due to end in December 2023, with the ABPI seeking early talks with the government to set out a completely new future settlement that ‘captures the huge potential of the life sciences sector to drive improvements in the health and wealth of everyone in the UK’.