For many decades, the UK government has pursued twin objectives in its dealings with the pharmaceutical industry. On the one hand, it has sought to deliver value for money to the NHS. And, on the other, it has sought to support a flourishing life sciences sector.
In the short-term, these objectives can sometimes be in conflict. The NHS may, for example, find that it has trouble in funding the purchase of a new medicine that was researched and developed here in the UK.
But, in the long-term, these objectives are aligned: the use of that medicine, for example – though expensive for the NHS to purchase – allows future clinical trials to be located here. That gives scientists and clinicians the expertise in the latest technologies which maintain the UK as a priority destination for inward R&D and manufacturing investment. Above all, it keeps people healthier and alive for longer – delivering benefits both economic and social. Together, everything contributes to a healthy economy and a world class, sustainable, NHS.
That is why pursuing the twin objectives together is so important. But in the recent past, something has changed. It is perhaps most obvious in the government’s current consultation on the statutory scheme, which talks only of its ‘primary purpose’ being to safeguard the financial position of the NHS. And if the statutory scheme is intended to be broadly equivalent to the voluntary scheme, the government must be pursuing that same objective in the PPRS too. To everyone across the industry, the picture is becoming clearer: the government is no longer prioritising a flourishing life sciences sector.
The manifestations of this change in policy are legion, and it is no overstatement to say that the UK is now becoming a hostile environment for the pharmaceutical industry to operate in.
The first key shift was the way in which NICE was undermined through the reforms NHS England imposed upon it last year. Now, following these reforms, a company which produces a medicine deemed to be cost effective – a cure, even – can no longer expect to see it made available on the NHS without interference from the government.
This has been followed this year by a quadruple whammy. First, there were the ‘no deal’ technical notices which set out the extra hoops that pharmaceutical companies can expect to have to jump through next year to sell their medicines in the UK market; a market that comprises only 3% of global sales.
Second, there was the request for companies to stockpile at their own expense six weeks’ supply of medicines to compensate for the government’s own failure to yet reach a deal with the EU. If rumours are correct that this will inflict costs on the industry of £100 million, then it is an outrage that the government is expecting others to pick up a bill for a price it should be paying itself. And for the many companies across our sector who operate at such low margins that this request is impossible to meet, it calls into question whether some medicines will continue to be supplied at all in the event of no deal.
Third, there are the proposals to introduce charges from April, sometimes in excess of £250,000, for NICE to review medicines – even though, with the reforms made to NICE, it is now possible that these assessments will result in a ‘no’ even for medicines which are judged to be cost-effective.
And finally, there are the proposals in the statutory scheme consultation to levy a tax on sales – there is no way of otherwise describing it – of more than 21% a year by 2021: a figure set so high that it is without question profits will be wiped out across many companies, and their ability to run their operations compromised too.
There can be no other sector of such value to the UK economy which is facing such active government interference both to reduce sales, and to apply a 21% sales tax – all whilst £100 million is being extorted to pay for the government’s preparations for Brexit. There is no other sector in which companies would not have cause to consider their place in the UK given such a hostile environment.
And sadly, all the evidence indicates that this is precisely what is happening. Even the most cursory glance at the government’s life sciences competitiveness indicators reveals that investment by pharmaceutical companies in R&D in the UK is declining, and the share of the UK’s patients on clinical trials is slipping. Worse, jobs in pharmaceutical manufacturing have fallen by 10,000 – 25% – since 2012. The government is presiding over the destruction of the crown jewels of the UK economy.
And to what end? Yes, in the short-term, the government will extract a financial benefit that will help it pay its Brexit consultancy bills. But unless it remembers that the long term is important too, and unless it rediscovers its support for the life sciences sector, over time fewer patients will be treated well, our science and research base will be undermined, and our economy will weaken – and there will be less money, not more, for the NHS.
Leslie Galloway is the chairman of EMIG