UK ministers have announced plans to conduct a swift review of a vital pricing agreement for National Health Service (NHS) drugs after pharmaceutical companies raised concerns about unexpectedly high costs associated with the current arrangement.

Urgent Review Planned

Health Secretary Wes Streeting, addressing an industry conference, stated that the government intends to revisit the drug pricing scheme, wherein pharmaceutical manufacturers provide discounted medicines to the NHS in bulk. This review is set to be completed before the government’s spending review in June.

Rethinking Medicine Costs

Streeting emphasized the need for a shift in perspective regarding drug expenditure, arguing that medicines should not be viewed merely as a “deadweight cost” but rather as a critical investment in public health. “We’ve moved from, quite rightly, trying to drive a good bargain on the prices of drugs to a position where sometimes people view medicine spend as a bit of a deadweight cost,” he remarked.

Challenges Ahead

The extent to which the review may alleviate the financial burden on drugmakers remains uncertain. Richard Torbett, Chief Executive of the Association of the British Pharmaceutical Industry, cautioned about the significant challenges ahead in reaching a consensus within the constraints of the government’s budget.

Understanding the Current Pricing Scheme

Every five years, the UK government collaborates with NHS England and the pharmaceutical sector to establish an overall sales cap for drugs dispensed to the NHS. This cap is subject to annual growth rates. Any sales exceeding this cap require manufacturers to repay the NHS through a levy. For the current year, under the Voluntary Scheme for Branded Medicines Pricing and Access and Growth (VPAG), pharmaceutical companies must return 22.9 percent of their UK sales to the government—surpassing initial estimations of 15 percent. This increase is largely attributed to the unanticipated volume of curative cell and gene therapies, along with treatments for cancer and diabetes purchased by NHS England.

Impact on Industry Investment

Pharmaceutical companies have expressed concerns that the current pricing scheme risks deterring investment in the UK at a time when the Labour government is striving to stimulate economic growth. Streeting noted that the existing system is failing to provide consistent access to treatments recommended by the National Institute for Health and Care Excellence (NICE), stating, “It’s almost like the guilty secret of our country that when people go to see a doctor . . . they assume they’re getting the best treatment available. But it is not the best treatment available always in our country.”