New Pricing System for Key Medicines

Introduction to the New Panel

Some of the global pharmaceutical industry’s top executives will join the government in forming a new panel to devise a new pricing system for key medicines. Whitehall officials and ministers will invite bosses from companies including AstraZeneca and GSK to join the new working group in the coming weeks.

Background of the New Deal

The move follows the announcement of a new drug pricing deal between the UK and US, which will see the NHS pay 25% more for branded drugs and reduce the "clawback tax" that pharmaceutical companies pay to the NHS. The deal means the UK will not impose tariffs on drug exports to the US for at least three years.

Objective of the New Working Group

Industry sources said the new working group would examine a range of options to replace the existing Voluntary Scheme for Branded Medicines Pricing and Access (VPAG) when it expires in around three years. These options are likely to include an outcome-based model that introduces fluctuations in drug pricing, as well as exploring a relationship between pricing and the level of drug development activity by pharmaceutical companies in the UK.

Concerns and Expectations

The VPAG scheme has drawn the ire of pharmaceutical companies, who have warned that continued rollout of the VPAG scheme could see them delay or cancel billions of pounds of investment in the UK. The new deal has been described as a "vital deal" that will ensure British patients get the cutting-edge medicines they need sooner, and the UK’s world-leading companies continue to develop treatments that can change lives.

Future of the Life Sciences Industry

The deal will also enable and incentivize life sciences companies to continue to invest and drive innovation in the UK. The Ministry of Science, Innovation and Technology declined to comment on the new working group. The formation of the new panel is expected to have a significant impact on the future of the life sciences industry in the UK.