Failure to resolve issues surrounding the “NHS levy”—a scheme by which drug companies rebate the health service—could undermine the UK’s competitiveness as a centre for life sciences, according to an industry leader.
Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry, was speaking as part of a special Board Agenda podcast looking at the life sciences sector and how it is developing in the post-pandemic world.
The levy, called VPAS (the Voluntary Scheme for Branded Medicines Pricing and Access), requires drug companies to rebate the NHS once pre-determined thresholds are reached. In 2019, the repayment percentage was 9.6%, but the level is expected to reach 27% in the current year, a figure that has caused consternation among many drug companies. Some companies have even decided to leave the scheme, while still more have called for reform.
The rise in rebate comes at a time when the chancellor, Jeremy Hunt, has said life sciences will be at the heart of the UK’s economic growth.
Torbett said restraints on government spending were coming at the same time as life sciences companies were required to take increasingly bigger risks to develop effective therapies.
“Does the UK scheme risk derailing the global industry and overshadowing global trends and global risks? I would say no,” said Torbett.
He added: “But, if your lens is ‘How do we make the UK the most attractive place for pharmaceutical life sciences investment?’, I would say then absolutely the scheme is fundamental to that.
“And the risk in the scheme is not that it derails the industry, but it derails the UK and it makes the UK less relevant, and it makes the UK less competitive when it comes to attracting really big investment opportunities from companies.”
Stuart Paynter, finance chief at Oxford Biomedica, the company behind one of the first Covid vaccines, said company “mission” would have to play a role, especially among those pursuing advanced treatments, such as cell and gene therapies.
Innovate to accumulate
“Our mission is to keep on innovating in order to bring down the base cost of the product to our partners. Then our partners can make a choice to go into a wider set of indications and drop the price, because they’ll make the returns back with volume,” Paynter said. “And they need to make a return, otherwise they cannot keep continuing to invest in R&D.”
Therapy development, the panel agreed, has become a collaborative task, with “ecosystems” of funders, researchers and users required to coordinate their efforts.
That has placed a premium on diplomatic and negotiating skills on life sciences boards.
Nigel Layton, a partner and life sciences expert at Mazars, the professional services firm, said companies “need people who have studied it [ecosystems] and understand it. And I think there is a shortage of those individuals.”
Şeyda Atadan Memiş, general manager UK and Ireland, for Japanese pharma firm Takeda, said that “decision making” in life sciences firms had become a discipline in its own right, or “unique” to the industry.
“Because we have competing demands from our business and our external ecosystem, and from the needs of our patients, it becomes increasingly more difficult and more critical how we land on our decisions.”
You can listen to the Board Agenda podcast here