The UK pharmaceutical industry may have to brace itself for even tougher times ahead after the Office of Health Economics forecast an NHS spending squeeze on innovative medicines over the next three years.

The annual drugs bill in the UK is currently around £10 billion, which equates to just about 10% of National Health Service expenditure, having risen around 3.5% a year between 2007 and 2011.

But despite attempts to boost the uptake of new medicines into the health service, it looks like the amount it will shell out on innovative branded medicines will shrink in real terms and as a proportion of the healthcare budget, as an increasing number of branded medicines lose their patent protection.

According to the OHE figures, compiled for the Association of the British Pharmaceutical Industry, while the total amount spent on the NHS is set to climb by 2.5% a year between 2011 and 2015, cash sunk into new branded medicines will rise by just 1.3%. 

And while the total medicines spend is predicted to grow around 3.7% annually up to 2015, in three years’ time drugs launched between 2012 and 2015 are expected to account for less than 2% of this expenditure.

Unsurprisingly, this has sparked concern throughout the research-based pharmaceutical industry that the NHS is not investing enough on the most innovative medicines and that patients in the UK are facing greater barriers to accessing them than their peers in other European countries.

"The UK has the lowest branded drug prices in Europe, but also has the slowest uptake of new medicines," noted the ABPI's chief executive Stephen Whitehead, speaking on the Today programme.

£3.4 billion savings

A total of £3.4 billion of the medicines bill will be freed up over the next three years as new generics flood the market, but Whitehead said he is "deeply concerned that these savings are not being reinvested back into the system," which, he stressed, "spells bad news for the discovery of new life saving medicines and ultimately the health and well-being of UK patients".

“We have to stop thinking of medicines as a cost and see them for what they are – an investment," he argued, and stressed, with reference to the looming negotiations with the government on value-based pricing, that the pharmaceutical industry must see its medicines "rewarded for the high risk and cost of research and development". 

Commenting on the OHE's forecast, Health Minister Lord Howe said: "Although it is not surprising for the industry to warn that spending on their own medicines may decline, we are determined to ensure patients continue to get access to the newest drugs at a price which represents value to them and to the taxpayer," and added: "That is why we will shortly begin negotiations with the industry on a new value-based pricing scheme".