UNITED KINGDOM — Following AbbVie and Eli Lilly’s departure from the UK’s voluntary drug pricing agreement in January, some executives from big pharmaceutical companies continue to raise concerns about the agreement that increasingly shifts the burden of cost for branded medicines onto the companies.
The agreement, known as the “Voluntary scheme for branded medicines pricing and access” (VPAS), was signed in 2019 between the UK government and the industry to maintain affordable prices for certain medications.
Under VPAS, pharmaceutical companies with branded medicines will have to pay back almost £3.3 billion (US$4 billion), or 26.5% of revenue, to the government in 2023.
This represents a significant increase from the £0.6 billion paid in 2021, which tripled to £1.8 billion (US$2.2 billion) the following year. As a result of this announcement, AbbVie and Eli Lilly withdrew from the pricing agreement.
The Association of the British Pharmaceutical Industry (ABPI), the UK pharma trade organization, has indicated that it is exploring alternative proposals for a new version of the agreement and plans to publish these proposals later this year.
During the most recent earnings calls held by Big Pharma companies, several executives expressed concerns about the pricing pressures they are facing in Europe.
Vas Narasimhan, the CEO of Novartis, referred to the situation as a “mixed bag” and expressed worries about the UK and other countries.
Narasimhan emphasized that the pharmaceutical industry needs to communicate more effectively with policymakers to ensure that investment in innovation is rewarded with an appropriate pricing environment.
Eli Lilly’s international president, Ilya Yuffa, commented on the company’s earnings call that they believe the UK’s voluntary system is “broken” and that they have exited the agreement.
Sanofi’s executive VP, Olivier Charmeil, noted on their earnings call that the company is experiencing “price pressure” in the current European environment.
AbbVie, which recently left the VPAS agreement, stated on its earnings call that their departure was a policy decision, and called for the UK government to reform the program.
The company’s Chief commercial officer, Jeff Stewart, stated that the revenue impact was significant and causing issues for all companies.
Pascal Soriot, the CEO of AstraZeneca, also commented on the UK’s tax environment, stating that it is making the country less attractive for biopharma investment.
Meanwhile, Bayer’s decision to shift its pharmaceutical business away from Europe and towards the US and China is driven by the unfavorable policies of European countries, including the UK, according to Stefan Oelrich, head of the German group’s pharmaceuticals arm.
In an interview with Financial Times, Oelrich criticized Europe as “innovation unfriendly,” making it difficult for drugmakers to generate adequate returns on their investments.
He also cited the UK’s scheme for branded medicines pricing, which requires companies to pay 15% of drug sales revenue to the government if the National Health Services’ overall bill for medicines rises by more than 2% annually.
Additionally, a draft act in Germany would reduce the period in which companies can set their own prices for pharmaceutical products.
For all the latest healthcare industry news from Africa and the World, subscribe to our NEWSLETTER, and YouTube Channel, follow us on Twitter and LinkedIn, and like us on Facebook.