The UK's plan for a new statutory pricing scheme for branded medicines could put future investments in the biotech sector at risk, says the Bioindustry Association (BIA).

The Department of Health plans to make the transition to a value-based pricing (VBP) scheme in 2014, with the National Institute for Health and Care Excellence (NICE) responsible for assessing the price of new drugs under the National Health Service, taking into account variables such as wider societal benefits and burden of illness.

The DoH launched a consultation on the plans in June, seeking feedback on anticipated cuts of 10%-20% on the average selling price of some branded drugs in hospitals. They will also remove some existing exemptions to price controls, with an exemption scheme for small companies introduced instead.

"The government's pricing consultation is an opportunity of vital significant importance to the UK life science sector, which will set the attractiveness of the UK as a location for ongoing medical research and development and ultimately patient access to new treatments," said BIA chief executive Steve Bates.

"The perception of the UK as a market for innovative products has an important bearing not only on the global investment decisions of multinational biopharmaceutical companies but also upon private investment to support early stage bioscience companies," he added.

The BIA says in its formal response to the proposals that a poor reimbursement framework undermines basic and translational R&D and the proposals are at odds with positive developments for biotech introduced under the UK's Strategy for Life Sciences.

These include the Biomedical Catalyst Funds to help small companies commercialise their R&D, and the provision of £1 billion a year through the National Institute for Health Research (NIHR), including £500 million to boost translational research links between the NHS, academia and industry.

The proposals risk the UK ceasing to be an attractive global launch market for new treatments, says the BIA, adding that "it is harder to sell innovative UK medicines around the globe if they are not purchased by the NHS".

The life sciences sector is an "ecosystem where investment in research and development is linked to potential for reward for the resulting innovation," it points out.

In May, the 2020health think-tank published a review of VBP from a patient's perspective and concluded that the proposals could make it harder for sick people to get treatment and urged the DoH to consider alternatives, including allowing drug companies to fix their own prices for individual drugs with new controls operating at the higher level of the entire cost of each company's drugs to the NHS.

"The proportion of the NHS budget spent on medicines continues to fall," said Bates. "It is these new, innovative drugs that have made a significant difference in outcomes in cancer and heart disease and continue to deliver sustainable efficiencies' for the NHS."