Wes Streeting has intensified his battle with drug companies over the price of their products, saying he will not let the industry rip off British patients or taxpayers by signing up to their demands.
The health secretary on Sunday accused pharmaceutical companies of being “shortsighted” and undermining their relationships with the government after the two sides failed to come to an agreement last week.
Streeting walked away from talks with the Association of the British Pharmaceutical Industry (ABPI) on Friday after the industry group failed to agree to government proposals for how much their revenues should be capped over the next three years.
The dispute centres on a voluntary scheme under which the NHS sets its budget for branded medicines and companies agree to pay back any revenues they make that go beyond that amount.
The scheme is designed to prevent the health service’s costs spiralling out of control, but it has been under review in recent months after it proved more expensive than drug companies were expecting.
The lack of agreement leaves the government in a standoff with drug makers just as it begins its 10-year plan to reshape the NHS, and only two months after identifying life sciences as one of eight high-growth industries at the heart of its industrial plans.
Streeting said: “The pharmaceuticals industry signed up to the [pricing] deal with the previous government. When it came out more expensive to industry than expected, we put forward an unprecedented offer to bring down payment rates for all future years of the scheme and accelerate growth in the sector – but the ABPI failed to reach an agreement.
“This was shortsighted and undermines our efforts to work collaboratively.”
He added: “I won’t allow big pharma to rip off our patients or taxpayers. Life sciences are a great British success story. We want the NHS to not only benefit from the revolution in life sciences and medical technology, but to drive it. We remain committed to building equitable partnerships with the sector to deliver for our economy and our society.”
The ABPI declined to comment. Its chief executive, Richard Torbett, said on Friday: “We need to reach a solution that improves patient access to future innovation, allows the sector to fulfil its growth potential, and does not require industry to pay back nearly three times as much of its revenues as is required in other European countries.”
The scheme launched in 2023 places a cap on how much the NHS can increase its spending on branded medicines each year. Companies then pay a rebate on revenues they make above that cap.
When it was first agreed, the government forecast that drug companies would face a rebate rate of 15% this year. But the NHS has spent far more than expected on such medicines, leaving the industry facing a rebate rate of about 23%.
Streeting had proposed a series of changes to the scheme that would have made it around £1bn cheaper over the next three years. The drug companies claim the savings are dwarfed by the amount they are having to give back to the government in that period, which they forecast to be about £13.5bn.
They have warned they will have to move drug trials and jobs out of the UK unless ministers commit to spending more of the NHS budget on medicines.
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Tom Keith-Roach, the UK president of AstraZeneca, said the UK was in “long-term race to the bottom”. He added: “As a life science investor, it is hard for me to champion the UK as a destination for new R&D or manufacturing or clinical trials if it is impossible for me to bring that innovation to patients.”
Johan Kahlström, the president of Novartis UK, said it was “very difficult for global boardrooms to justify investments in the UK” as a result of the rebates.
The drug firms and Streeting are also at loggerheads over the way in which the National Institute for Clinical Excellence (Nice) judges whether new drugs are worth approving for the NHS.
The regulator approves drugs that cost £20,000-£30,000 for each additional year of quality life they typically add for a patient. The drug firms say that this is too low given the recent inflation in the cost of cutting-edge medicines, and some are warning they will not launch their newest products in the UK.
Gilead Sciences said this weekend it would not submit its latest breast cancer drug for assessment by Nice, saying it would not be able to make sufficient profit from it.
Streeting said: “Nice was established by the last Labour government to deliver a better deal for patients and the taxpayers. The process is robust and fair, and balances the cost of a treatment against its effectiveness. Any pharma company offering medicines that work should be comfortable going through this route.”