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The UK’s health secretary has issued a private ultimatum to pharmaceutical companies to accept the government’s latest offer on drug pricing by Friday or he will publicly end the talks, raising the stakes in negotiations over how much the NHS should pay for treatments.
Wes Streeting said in a letter to the Association of the British Pharmaceutical Industry that they had been given ample time to consider the “generous” offer put to them on drug pricing in recent weeks, but had “repeatedly delayed” making a decision.
The warning sent on Wednesday added that if the industry did not accept, he would “confirm publicly at 12pm on Friday 22nd of August that the review has concluded without an agreement”, meaning the existing NHS drug pricing mechanism would “continue to have effect unamended”.
“Your members have had sufficient time to consider the proposals, and it is now in all our interests that we have clarity on the outcome,” Streeting wrote in the letter, the contents of which were shared with the Financial Times.
The government and pharmaceutical sector have engaged in increasingly fraught negotiations for months about a pricing mechanism in the UK known as a clawback tax.
The tax rate is calculated each year based on how much NHS spending on drugs outpaces an agreed growth rate, and is designed to limit the cost of medicines for Britain’s state-run health system.
An unexpected increase in the clawback tax this year to almost 23 per cent, well above the 15 per cent forecast, has spurred the talks. This was higher than had originally been anticipated by both parties.
The terms of the deal offered by the government included lower rebate rates in all future years of the scheme, an average double-digit percentage increase in the price of new medicines to support wider patient access to a range of drugs, and a commitment to accelerating net spending on new medicines, with specific 10-year targets, according to people briefed on the contents.
Senior pharma industry figures are adamant they will not conduct a vote or agree to the terms put forward by UK ministers, according to a person close to the industry.
He added that chief executives appeared to be “ignoring the deadline” set by Streeting, and said the industry viewed the offer as vague and insufficient.
“The CEOs have reached a point of believing anything ambiguous will be bad,” he said.
People close to the industry said the offer lacked detail on when in that decade the spending would come, or whether it would simply be spending more on a higher volume of drugs.
The sector is under intense pressure from US President Donald Trump to raise prices in Europe, as he pushes to lower them in the US. The UK government is trying to keep a lid on costs at a time when the public finances are tight, while also maintaining access to cutting edge treatments.
ABPI did not immediately comment.
One person added that the government promised a rate of spending on medicines as a proportion of GDP that still lagged Germany and Italy.
“The government has misunderstood the competitive and dynamic international environment we are operating in,” said another person close to the industry. “The latest offer was nowhere near where it needs to be to be internationally competitive.”
NHS England, the biggest regional NHS body and a key player in the negotiations, has said that the rebate increase is the result of higher than expected purchases of medicines for conditions including cancer, diabetes, and eye diseases, as well as cell and gene therapies.
“Everything we’re able to offer is now on the table,” said a person close to Streeting.
Trump has given the industry a deadline in late September to voluntarily lower US drug prices, or face a ‘Most Favoured Nation’ policy that would peg US prices to the lowest prices in other developed countries.
Eli Lilly recently raised the price of its weight loss drug Mounjaro in the UK by up to 170 per cent, in a move designed to address Trump’s complaints about “foreign freeloaders”. The price increase did not apply to the NHS.
A government spokesperson said the voluntary scheme for branded medicines pricing, access and growth (VPAG), negotiated with industry, “helps improve access to cutting-edge treatments for NHS patients while keeping the medicines bill sustainable for taxpayers”.
They said they put forward an “ambitious, generous set of proposals for reforms” in June, adding that it was an “unprecedented offer which would increase net spending on medicines by around £1bn over the next three years with billions more expected over the next decade”.
“We hope the ABPI will now put our generous proposal to their board for a vote, ahead of the deadline,” they said.
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