Leading global pharmaceutical companies, AbbVie and Eli Lilly announced on the 16th of January their exit from the UK’s Voluntary Scheme for Branded Medicines Pricing and Access (VPAS). VPAS is a well-established agreement between the UK government and the pharma industry. It aims to keep the costs of branded medicines predictable and affordable for the NHS by introducing rebates that must be paid by the supplier if sales of branded medicines are greater than 2% more than the previous year.
The exit of the companies is a reaction to an increased revenue clawback which has reached a record 26.5% for 2023. The exorbitant values are caused by the rise in the UK health needs which, driven by the pandemic crisis, have outgrown the industry expectations and driven up the repayment rates far beyond sustainable levels.
As a result, the companies will be subject to the alternative Statutory Scheme for Branded Medicines, which is imposed by law and not through negotiation. In the past, the Statutory Scheme had an even higher payback rate than the VPAS, and there are currently plans for an increase.
The industry representatives are clear that if the UK cannot address rapidly rising rates in the coming years and bring repayment rates back to historical averages, the UK will see an exodus of pharma investments, job opportunities, and research partnerships.
Laura Steele, Eli Lilly’s president for Northern Europe, commented: “the current scheme has harmed innovation, with costs spiralling out of control, and the UK falling behind other major countries to be left as a global outlier.” Steele said, “we simply cannot stay signed up to a scheme which has such a punishing impact on innovation, which is why we want to see action on a new settlement.”
Todd Manning, General Manager UK, AbbVie, said: “AbbVie has always been a member of the Voluntary Scheme and leaving is not a decision we take lightly but Levy rates close to 27% of revenue are not seen in any comparable country and they have a demonstrable impact on our ability to operate sustainably in the UK. Without a positive signal that the future scheme will deliver more reasonable rates, I fear it will be increasingly difficult to advocate for the UK and what I believe is our shared ambition of securing investment, jobs and, ultimately, delivering improved health outcomes for UK patients.”
Sources:
- Leading global pharma firms exit UK drug pricing agreement. ABPI. https://www.abpi.org.uk/media/news/2023/january/leading-global-pharma-firms-exit-uk-drug-pricing-agreement/ Accessed 17/01/2023
- AbbVie, Lilly pull out of UK drug pricing agreement over spiralling clawbacks. FirstWord Pharma. https://firstwordpharma.com/story/5696817 Accessed 17/01/2023