Anne Marie Morris (Newton Abbot) (Con) I beg to move, That this
House has considered the voluntary scheme for branded medicines and
the Life Sciences Vision. It is an honour to serve under your
chairmanship, Mr Sharma. The “Life Sciences Vision”, which was
agreed and published in 2021, was a very ambitious document of
which the Government should be rightly proud. It looks at further
investment and development in neurodegenerative disease,
kick-starting...Request free trial
(Newton Abbot) (Con)
I beg to move,
That this House has considered the voluntary scheme for branded
medicines and the Life Sciences Vision.
It is an honour to serve under your chairmanship, Mr Sharma. The
“Life Sciences Vision”, which was agreed and published in 2021,
was a very ambitious document of which the Government should be
rightly proud. It looks at further investment and development in
neurodegenerative disease, kick-starting diagnostics, treatments
and novel vaccines, more investment in cardiovascular disease and
obesity, morbidity or mortality from respiratory disease, the
biology of ageing and mental health conditions. That is an
ambitious and worthwhile list. However, its delivery can only be
a joint endeavour; it has to be a partnership between Government
and industry. Both parts need to do what they can to drive this
forward.
If industry is to play its part, it needs from Government good
research facilities, first-class universities and academics who
are attracted to this country. It needs efficient an effective
systems for clinical trials, phases 1 to 3. I am aware that the
Government are currently looking at how that might be improved
and that James O’Shaughnessy is spearheading a report that will
hopefully be out shortly. I sincerely hope that its findings will
be implemented.
Industry also needs a regulatory regime that is fit for purpose
across both the Medicines and Healthcare products Regulatory
Agency, which evaluates whether a medicine is fit for purpose and
safe, and the National Institute for Health and Care Excellence,
which looks at whether a medicine is value for money. Industry
also needs to ensure that whatever medicines finally come through
the regulatory system are used—that there is an uptake among
patients and that they are prescribed. There is clearly a moral
imperative for that, but there is also clearly a financial
one.
From the Government’s perspective, if they are to invest in
ensuring that we are most attractive and efficient place to
launch a medicine, they need to ensure that UK patients have
quick access to both old and new innovative medicines. They need
to ensure that industry is there, ready and waiting, with the new
initiatives and ideas absolutely raring to go. That said, the
Government need to manage the overall cost of the medicines
budget, and they need a commitment from industry to invest.
Fundamentally, it is a contract—an agreement—and both benefit if
the deal is right.
One of the mechanisms that sets out the terms of that arrangement
in practice is the voluntary scheme for branded medicines pricing
and access. Most of us refer to it in shorthand as VPAS, as I
shall for the purposes of this debate. So what is VPAS?
Effectively, in this agreement the Government set out what they
will do for the industry. In the last iteration of VPAS,
commitments were made about reforms to NICE, some of which have
been met and some of which have not. At the same time, industry
agrees that it will cap the growth of Government medicine
spending. The consequence is that all over-prescribing beyond the
agreed and expected rate of growth is at the risk of the
pharmaceutical industry. It is a very complicated formula.
The current scheme was devised in 2019. It replaced the PPRS—the
pharmaceutical price regulation scheme—and was originally
conceived such that the medicines budget could grow by 1.7%. That
figure is now 2%. Any prescribing over that figure would
effectively be paid for by the pharmaceutical companies by way of
a reimbursement to Government of a percentage of their turnover,
but it is a very complex and uncertain calculation.
One of the reasons for that is that the figure is anchored at a
2013 growth point, and it is not re-based each year. The
consequence is that there is great uncertainty for any investing
company about what the rebate will be year on year, which makes
it difficult to budget. The compounding effect of the lack of
re-basing is that the effective rebate is currently 26%, and left
unaltered it would go to 30% for the next iteration, which is
currently being negotiated to start in 2024.
We need to get that pricing in context. Effectively, when
pharmaceutical companies go to NHS England and the regulators,
there is a process of price-gouging. The first gouge,
effectively, is by NICE. It looks at the market price and
discounts it by an average of 55% to 65% under the patient access
scheme. After that, NHS England may require a further cut to meet
the affordability criterion of £20 million. The VPAS slice is
after that, and, as a consequence, many pharmaceutical companies
are saying, “Frankly, the pips are being squeezed too hard, and
we simply cannot afford to invest in the research and launch our
medicines here.” The current rate is uncompetitive
internationally, and unless we change our approach to rebasing
and to the growth cap, I fear we will lose much-needed investment
here.
Pharmaceutical companies have a choice, and they can research and
launch anywhere in the world. We are now a single-country
regulator, rather than part of a European system, and that makes
us, from the start, much less attractive. Industry is already
voting with its feet. Indeed, in this morning’s Science,
Innovation and Technology questions, a number of questions were
about disinvestment decisions by pharmaceutical giants in this
country. It is clear that many are simply no longer investing in
research here or in UK regulatory approvals. That is a loss not
just to the economy but to patients, because every drug
prescribed to patients has to go through that regulatory approval
process. Indeed, the Association of the British Pharmaceutical
Industry has done some analysis and believes, based on the
evidence, that our global share of research and development
declined from 4.9% in 2012 to 3.3% in 2020. It advises that the
number of initiated industry clinical trials fell by 41% between
2017 and 2021. Across leading European countries, the UK saw the
largest decline in new medicine launches between 2010 and
2021.
However, it does not have to be like that. The ABPI and
PricewaterhouseCoopers confirmed in a report that the life
sciences sector is one of the most valuable for the UK: it
creates £36.9 billion in gross value added, 584,000 jobs and 18%
of all the UK’s R&D. They say that if the life sciences
strategy was implemented in full, there would be £68 billion of
additional GDP over 30 years from R&D investment, 85,000
additional jobs and a 40% decrease in disease burden. So VPAS
could and should be part of a solution, not a problem.
The approach needs fundamentally to change; it cannot continue to
be a question of who blinks first on what the pricing figure and
the size of the reimbursement will be. This has to be looked at
holistically in the context of what is in the best interests of
UK plc and our health outcomes. The approach needs to be a
collaborative one in which risk is shared. The solution proposed
by the ABPI is a cut in the rebate to 6.88% and the creation of a
two-pot system under which one pot continues to go the Treasury
while the other—a separate 1.5% premium, if you like—goes
specifically towards clinical research, genomics and so on.
The challenge with the second pot is, first, that it is quite
small in terms of making significant changes; secondly, that it
is a bidding pot, so there will be winners and losers; and
thirdly, that although the ambition is to use it to level up,
that will create all sorts of problems in relation to the Barnett
formula. So although the system is well intentioned, I am not
sure it would actually work in practice. It has had much support
from patient groups and others, and I understand why, because
delivering a fairer relationship is the direction of travel.
However, we have to bear in mind the political and economic
reality of where we are, and we must not lose the prize of
providing a much stronger link to, and a driver of, the life
sciences vision, which seems largely to have been orphaned. That
agreement needs some tangible benefits and obligations. There
need to be key performance indicators for both sides—industry and
Government—and there need to be deliverables for both sides.
The all-party parliamentary group on access to medicines and
medical devices, which I chair, set out an alternative proposal
to try to find a more collaborative approach. I believe in the
free market and that, ideally, there should be no cap; sheer
market growth through investment would result in our growing the
economy and the Government tax take funding new medicines and
producing money for the NHS. However, I am clear that I have to
be grounded in reality, and if we are to find a way forward,
there needs to be a risk-sharing solution, because no cap is the
inverse of where we are now—it puts all the risk on Government
rather than on industry.
How can we find this risk-sharing solution? First, we can
increase the cap. It is currently at 2%; 4% would allow quite a
lot of headroom. We could ensure that, each year, the system is
rebased, so that we do not end up with a complex way of
compounding what the rebate figure will be year on year.
One of industry’s real concerns is that a big chunk of money goes
straight into Treasury coffers, and there is no evidence of how
it is recycled to benefit pharma or health. In its paper, the
APPG suggests that we ringfence a large part of that rebate,
though probably not all. Part of it would probably still have to
go back to the Treasury, but a significant enough amount would
enable those seven life science missions to be driven forward,
and industry, academia and clinicians could look at what we can
do to drive this vision forward with a sensible amount of
money.
The current scheme could also be simplified by excluding some of
the six categories of medicines included in the VPAS scheme.
Biosimilars and branded generics, where the branding is mandated
by the regulator rather than choice, could sensibly be excluded.
I appreciate that that increases the cost, but given that those
products represent such a large chunk of medicines used in the
NHS, that must be a no-brainer. Some of those are older products
that are of great benefit to the NHS.
There has also been concern that the negotiation needs to be
across all Government Departments, whether the Department of
Health and Social Care, NHS England, the Treasury, the Department
for Business and Trade or the new Department for Science,
Innovation and Technology. Similarly, although the Association of
the British Pharmaceutical Industry represents all the sectors,
some very specific interests groups, such as the Ethical
Medicines Industry Group and the British Generic Manufacturers
Association, believe they need the opportunity to put their case
forward. What is the downside of listening? Surely, think-tanks,
academia and those groups all have something to say. If we want
the right answer, that is the right way forward. We need a
two-way commitment and two-way investment.
What could the Government do to help themselves manage their
medicine budget cost? First, they could streamline regulatory
activity. Currently, we have the Medicines and Healthcare
products Regulatory Agency and the National Institute for Health
and Care Excellence. That is a sequential system, which means we
have to go through different sets of appraisal to satisfy both
regulators. Much of the data and many of the questions, while not
the same, are similar. Other jurisdictions are looking at running
the two processes in parallel. Why do we not steal a march on
others and integrate them? We could do that and have a
state-of-the-art regulatory body. To do that, we would need to
take out the budget impact test and put it back into NHS England,
where it started. That strikes me as the right place for it to
sit.
How could we monetise that regulator? First, as the Government
already recognised in the last Budget, we should look at mutual
recognition of approvals in the USA, Japan and the EU. That will
not be easy, and I suspect it will be possible only in some
limited areas of medicine. None the less, that is the way to go.
Many developing countries would be delighted to have a quality
regulator such as the MHRA and NICE. Why can we not charge to be
their regulator?
The real call from industry, however, is to make uptake real.
Although the theory is that any drug approved by NICE will
automatically be taken up in the integrated care system budgeting
system, the reality is that that is not the case, because there
is no enforcement mechanism. That is very important for financial
and moral reasons, and uptake is an issue that the Government
could sensibly agree to look at. It is about implementing many of
the new suggestions coming forward and, hopefully, the clinical
trials and recommendations from James O’Shaughnessy. Because we
would have a large pot for life sciences, we could create a
long-term working partnership through the VPAS to deliver the
life sciences vision.
If this is going to work, the industry needs to identify, in
principle, investments that it would make in the UK. I know that
such discussions take place, but what can the industry bring to
the table to generate growth in the economy, increase skilled
jobs and attract research academics and practising physicians?
How can it identify ways in which it can support the Government
in other parts of the life sciences vision delivery pipeline?
Ultimately, much of this is going to be based on trust and good
will. Sadly, that is not there at the moment, so the most
important thing is to get it back.
For the VPAS 2024 to work, we need something that is fair to the
industry and the Government and that will deliver what we
absolutely need: the most innovative medicines for individuals
living in this country, which they want and deserve. It can be
done, and I am absolutely confident the Minister and his team
will do their level best to try to achieve that. I am conscious
that he is limited in what he can say, because of ongoing
consultations, but I would welcome some reassurance that he
agrees we should move to something that is more of a
partnership—where there is true commitment and collaboration, and
where there is a true link between the VPAS payment by industry
and its use for life sciences development—so that we can actually
see the life sciences vision live.
5.17pm
(Cambridge) (Lab)
It is a pleasure to serve with you in the Chair, Mr Sharma. I
congratulate the hon. Member for Newton Abbot () not only on securing the
debate, but on setting out in such detail and so effectively the
complicated range of issues we face. I agree with much of her
analysis of the problem, and although I am not sure I agree with
all her proposed solutions, it is important that they are brought
forward and discussed.
I represent an area of the country where life sciences,
particularly research and innovation, are absolutely central to
our economic prosperity. Thousands and thousands of jobs, and
major investments, are at stake. Partly as a consequence of that,
I have chaired the all-party parliamentary group for life
sciences for a number of years, and I am grateful to a number of
key players in the sector, including Steve Bates of the
Bioindustry Association and Leslie Galloway of the Ethical
Medicines Industry Group, for their advice in advance of the
debate.
Over many months in my part of the world, I have been hearing
from a range of people in the sector about their growing concern
about the effect that the rebate level is having on a whole range
of organisations and the threat that it poses to future
investment and jobs. Indeed, the chief executive officer of the
BIA has said that the clawback rate has
“gone down like a lead balloon in key global pharma
boardrooms”,
and some have consequently withdrawn from the scheme.
I appreciate that this is a negotiation, but in my time talking
to people in my part of the world, I have not heard this many
concerns raised. Obviously, one always treats some of them with
caution, but there are enough to make me think that this is a
serious threat. We all agree that we want the NHS to have rapid
access to, and the most consistent supply of, the most modern
medicines it needs at affordable prices, and in achieving that,
we can secure those vital jobs and investment. Frankly, in a
complex world where medicines pricing is far from transparent and
huge sums are now needed to develop new medicines, that is much
easier said than done, not least because, as our knowledge and
computational power and our understanding of genetics increase,
making much more possible—particularly in terms of personalised
treatments—the challenge of costs will only grow.
It is absolutely essential that any Government strike the right
balance between securing taxpayer value and investing
appropriately in our domestic life sciences industry. At the
moment, many in the industry fear that this Government are
cutting off their nose to spite their face. Yes, a hard bargain
has been driven by the NHS—good—but there is a danger that it
comes back to bite, especially at a time when we face shortages
of supply. Put crudely, suppliers do not have to supply here if
they are not getting the right deal.
As some see it, NHS England secures extra value by imposing
commercial deals that take the prices of medicines below what
NICE would consider cost-effective, even based on affordability
thresholds that have not changed since they were introduced when
NICE was established back in 1999. The risk is that the
unintended consequence of the good deal that Governments have got
drives industry away from the UK at a time when we need the life
sciences sector to invest more.
This is not only about VPAS; there are other factors too. The
bitter truth is that, despite the Government rightly identifying
the life sciences sector as key for our future prosperity, the
UK’s share of global R&D spend has decreased from 4.9% to
3.9% since 2012, and clinical trial numbers have fallen 41% since
2017. That has been a consistent message from industry over the
last two years, and it has been raised consistently with
Ministers.
Shockingly, the UK now has the highest rate of decline in new
drug launches compared with Spain, Italy, Germany and France. If
the UK ceases to be a first-launch market, patients will not have
access to the latest drugs or clinical trials, we will lose the
ability to compare future treatments against modern care
standards and we will lose vital workforce skills that, once they
are gone, will be difficult to replace. It is not just the newer
patented drugs that are under threat, but generics and
biosimilars too. An unintended consequence of the success of the
VPAS scheme is the risk of reducing the availability of
biosimilars and generics, as companies prioritise stock to
higher-margin markets. A good price but no supply is not the
outcome anyone is looking for.
What is to be done? I urge the Government not to dig in their
heels and to at least have a sensible dialogue. I echo many of
the points made by the hon. Member for Newton Abbot. Let the
Government admit that there are problems: yes, our unified NHS is
a remarkable resource for research, but the fragmented and
complicated decision-making processes undermine that potential.
It is a well-known problem. It is no good claiming that there are
new regulatory opportunities post Brexit if regulators are then
starved of the resources to make those opportunities real. We
should recognise that the decline in clinical trials is not just
an unfortunate by-product of an NHS in crisis; it is a real
problem in itself, and it needs to be addressed.
The distance between how the discount levy is spent and those who
make prescribing decisions just does not work. It does not
incentivise behaviour, so it does not affect uptake, as the hon.
Member for Newton Abbot said. Currently, there is no link between
resources returned to Government and the wider life sciences
vision. Addressing those points would make a difference, and I
genuinely look forward to hearing the Minister’s response.
None of this is easy—it is complicated—but it is really
important. Failure to deal with these problems is bad for my
constituents, bad for the UK economy and bad for patients. The
Government need to get out of denial mode and address the problem
urgently.
5.24pm
(Linlithgow and East Falkirk)
(SNP)
It is a pleasure to serve under your chairmanship, Mr Sharma. I
am grateful to the hon. Member for Newton Abbot () for securing today’s
debate on the voluntary scheme for branded medicines and the life
sciences vision.
The UK Government’s current voluntary scheme for pharmaceutical
companies has come under criticism for its unsustainable payment
rates, which are well above both historical and international
norms. As we have heard, companies are required to pay a revenue
tax of 26.5% to the UK Government, in addition to all other
taxes, which is significantly higher than that in other
countries. That has led to two large US-based drug companies,
AbbVie and Eli Lilly, exiting the VPAS, citing the punitive
system of revenue clawbacks. Other companies, such as Bayer and
Bristol-Myers Squibb, have also threatened to reduce their UK
footprint in response to the increasing clawbacks.
The pharmaceutical trade body has called for the UK Government to
scrap their plans to raise the repayment rates for drug makers,
so as to avoid possible setbacks for the sector. The high payment
rates are seen as a global outlier and are undermining the UK’s
ability to attract investment and become a global leader post
Brexit. I sincerely hope that the UK Government are successful in
their efforts to address these concerns. Sir Hugh Taylor has been
appointed as chief adviser for VPAS negotiations. He will oversee
the negotiations for the Government and the NHS on a successor to
the 2019 VPAS, which will expire at the end of 2023.
Medicines are crucial for healthcare and are the second largest
expense for NHS Scotland. They prevent, control, palliate or cure
many diseases. The Scottish Government are committed to improving
patient access to safe and effective new medicines. The
regulation of medicine pricing is the responsibility of the UK
Government, but the Scottish Government are involved in the
UK-wide voluntary VPAS agreement between the four UK nations and
the pharmaceutical industry that caps NHS spending on branded
medicines. Companies exceeding the VPAS revenue cap pay rebates
to the Scottish Government and the three other UK
Administrations. The cap grows by 2% annually and the sales above
it are paid back to the Department of Health and Social Care via
the levy. As we know, the scheme has been active since 2019 and
will end later this year.
Scotland uses the VPAS receipts to fund the new medicines fund,
which supports health boards with the cost of introducing new
medicines, including orphan, ultra-orphan and end-of-life
medicines. The fund covers medicines approved by the Scottish
Medicines Consortium, and affordability should not prevent access
to new medicines. Since 2014, £456.5 million has been made
available to health boards. However, it is unclear if the new
medicines fund will be sustained beyond December, as VPAS funding
is not certain. Going forward, certainty is essential both for
the NHS and for our life sciences sector.
Scotland’s life sciences community has distinctive capabilities,
a strong business base and excellent research institutions that
continue to create high-value jobs. We aim to make Scotland the
preferred location for the life sciences community. Scotland’s
life sciences sector provides economic benefits and improves
healthcare. With over 700 businesses and institutions, it employs
41,700 people. It is identified as a growth sector and is part of
Scotland’s national strategy for economic transformation.
Scotland is known for drug discovery and advanced manufacturing,
contributing to international exports and research and
development investment. In 2018, £164 million was invested in
pharmaceutical research and development. It is estimated that
that will generate £1.5 billion in economic benefits over the
next three decades. That puts its importance in scale.
In conclusion, there can be no doubt as to how important the
sector is to Scotland’s economy, both now and in the future, nor
is there any doubt as to the significance of the funding that
VPAS provides to our NHS. Certainty of funding beyond the current
scheme is now needed. We need to get the balance right, however,
both to sustain the life sciences sector and to support our
NHS.
5.28pm
(Bristol South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Sharma. I
understand that Parliament is technically in recess, but here we
are working hard to the last on this very important debate. I am
grateful to the hon. Member for Newton Abbot () for securing it. I agree
with my hon. Friend the Member for Cambridge () that she used her expert
knowledge to provide a detailed outline of the issues.
As the hon. Lady said, the scheme has a number of objectives,
including improving patient access to medicines, getting the best
value and most effective medicines introduced more quickly, and
supporting innovation in a successful life sciences industry here
in the UK. It is a complex area, balancing what often seem to be
competing priorities around keeping costs low and getting a fair
return for the industry. Ultimately, we need to remember that
this debate is about people: our constituents, ourselves and
families. People expect to be treated with the best medication
available and for the NHS to provide good value to the
taxpayer.
Last week the Minister outlined that
“we are seeking a mutually beneficial voluntary scheme that
supports patient outcomes, a strong life sciences industry and a
financially sustainable NHS.”—[Official Report, 25 April 2023;
Vol. 731, c. 584.]
I hope he will today update us on where that work has got to, and
on whether the Government are any closer to a solution. That
would be most welcome, as other Members have outlined.
I will take the objectives that the Minister outlined one by one.
Supporting patient outcomes is vital; we all want the best for
our constituents. There are a number of heartbreaking cases where
people have not been able to get the drugs they need. Many
colleagues have raised those cases in this place and have become
experts on behalf of their constituents. It is a devastating
issue for many people. I think that people do understand that
this is complex and difficult, particularly for rare diseases.
Although we recognise the need for commercial confidentiality,
people need greater empowerment. The taxpayers who fund our
system need to understand the transparency and accountability
associated with those agreements.
The second issue that the Minister outlined is the life science
industry, which is crucial to our economy. It is disappointing,
as the hon. Member for Newton Abbot outlined, that there is a
decrease in our share of global investment in R&D. It is
worrying that companies are leaving the UK to seek other markets.
We are all hugely grateful to the sector that got us through the
pandemic. We all learned a lot more about the sector in that
period, but it was able to do that because of previous,
sustained, long-term investment. That is where we need to get
back to.
We have consistently led in the field of life sciences research
and development, an industry that employs more than 260,000
people across more than 6,000 businesses and generates a huge
annual turnover. We need it to thrive. However, the Government
are not serious about science. Due to their lack of investment
and strategy, we are not converting our rich science base into
the high-skill, high-wage, high-productivity economy that we all
want to see. There is not a detailed plan to get us to where we
need to be.
The Labour party is committed to harnessing the potential of the
sector. Investment and reform of research and funding is key to
improving outcomes. At the centre of our science policy is a
target to raise total investment in R&D to 3% of GDP by 2030.
Targeting that investment will help us to develop the treatments
and innovations we need for the future. It will be part of our
wider industrial strategy to build the high-wage, high-growth and
more productive economy that we want to see.
The third point the Minister made was about a financially
sustainable NHS. The current backlogs of care and the workforce
shortages that have put the NHS under increasing operational and
financial pressure are immense. Those pressures will only be
exacerbated by maintaining an environment that fails to encourage
much-needed innovation. Again, there are clear lessons to be
learned from the pandemic, but in a stretched system that had
over 4 million people waiting for treatment before the pandemic,
research and clinical trials can become less of a focus. They are
people-intense—I have been part of them in a previous role—and
require focus. Support for the wider health sector is crucial in
helping that move along.
Investment in health and futureproofing our system is good not
only for patients, the public and the life science sector but the
wider economy. The cost of ill health is substantial, and we have
much evidence of the link between the health of the nation and
societal wellbeing.
In conclusion, we are seeing growing concern about the current
scheme. Over the past year, the supply of branded generics in
particular has been dented by steep increases—linked to high
price inflation—in VPAS payments. It is impacting on shortages—we
look forward to hearing the Minister’s comments on that—and the
supply of medications. Issues in the scheme are made evident when
major companies leave it. It would be helpful to hear from the
Minister what action he has taken to support the life sciences
industry in this country, and to give clarity and support, which
we would all like to see, to those undertaking research into
potentially life-saving drugs. We want support to be given to the
key industries, particularly in places such as Cambridge, as
outlined by my hon. Friend the Member for Cambridge, but also in
all our constituencies across the country. It is vital that the
Government get that plan in place.
5.34pm
The Minister for Health and Secondary Care ()
It is a pleasure to serve under your chairmanship, Mr Sharma. I
thank my hon. Friend the Member for Newton Abbot () for securing this
important and timely debate—I will come on to why it is so timely
in a moment. I thank Members from across the House who have
contributed to what has been a highly informed discussion,
especially as the House is now technically in recess, as the hon.
Member for Bristol South () has said.
Members will know that the current VPAS scheme is the latest in a
long line of such agreements, which date back to 1957. For many
years, those agreements have been at the heart of a collaborative
relationship between the Government and industry. As my hon.
Friend the Member for Newton Abbot says, the partnership helps to
manage the affordability of medicines while, vitally, supporting
our life sciences sector to deliver for UK patients and provide
them with access to the most innovative and cutting-edge
medicines both now and in the future.
VPAS has proven to be a powerful tool in both improving patient
outcomes and supporting economic growth. Hon. Members will be
aware that a key goal of VPAS, as my hon. Friend pointed out, is
to ensure the sustainability of NHS finances by limiting total
growth in spending on medicines. Since its inception in 2019,
VPAS has driven significant improvements in patient access to
cost-effective medicines. It has also ensured predictable
spending growth, which is key for the NHS during a period of
economic uncertainty.
I can absolutely assure hon. Members that the Government remain
firmly committed to the scheme and to continuing to work with the
pharmaceutical industry to create a strong, innovation-friendly
environment for the development of medicines here in the United
Kingdom. We set that out in our life sciences vision, as my hon.
Friend said. As she also pointed out, there is only so much I can
say, because it is commercially sensitive and negotiations start
tomorrow, which is why this debate is so timely.
As both my hon. Friend and the hon. Member for Bristol South
said, and as I have set out previously, the idea is to create a
four-way win—a win for UK plc, and I will come on to why that is
important; a win for our NHS, and the hon. Lady eloquently set
out why that is so important; a win for patients, so that we are
getting the most cutting-edge and innovative medicines to
patients here in the United Kingdom first; and, importantly, a
win for industry because of its importance to UK plc. As my hon.
Friend the Member for Newton Abbot pointed out, life sciences
falls under multiple Government Departments, which makes it
complex and not the easiest thing to navigate around
Government.
As my hon. Friend rightly says, life sciences falls under the
Departments for Business and Trade and for Science, Innovation
and Technology, is covered by us at the Department of Health and
Social Care and therefore also by NHS England, and is also
covered by the Treasury —ultimately, everything comes back to the
Treasury. But then we have the Office for Life Sciences, which
sits partially in DSIT and partially in DHSC and co-ordinates
life sciences across Government.
I understand what my hon. Friend says about the important link
between medicine pricing and life sciences investment in the UK,
but we are in danger of simplifying a very complex situation. If
it were simply down to medicine pricing, that would be a far
easier argument to make to Treasury. The reality is that it is
not; when we look at the investment environment in the UK, we see
that it comes down to a number of things.
Yes, medicine pricing is part of that investment environment, but
it also comes down to regulation, as my hon. Friend said, with
MHRA and NICE, and to adoption and take-up in the NHS. Each
individual trust and GP practice is autonomous. GPs, surgeons and
clinicians prescribe the drugs they wish to prescribe—that is not
something we centrally mandate—which means that adoption and
roll-out across the NHS are not always as easy or as simple as
some of the pharmaceutical companies would like it to be, solely
within the gift of the Department, Ministers and clinicians at
NHS England.
Clinical trials, as the hon. Member for Bristol South rightly
said, are hugely important, and I will come on to talk about that
later. The hon. Member for Cambridge () set out eloquently the
importance of academia and the role it plays in inward investment
into UK plc by pharmaceutical companies because of the golden
triangle between London, Cambridge and Oxford—and beyond. That
work is spread far more widely around the United Kingdom, but
those three places are hubs, and rightly so, and I have enjoyed
many a visit to see the incredible work being done there.
There are other issues, such as access to finance, R&D tax
credits and, vitally, the NHS as an innovation partner, which is
often forgotten. We talk about Oxford, Cambridge and some of the
big university and teaching hospitals in London. Actually, the
key is every district general hospital—and, in fact, I would love
this to be the case for every GP practice up and down the
country—being part of clinical research, and encouraging its
patients to take part, because we know the impact that that would
have.
I recognise the link, but it is wider than that; it is about the
environment here in the UK. That is important because when I
speak to UK CEOs of pharma companies —the hon. Member for
Cambridge set this out—they raise not only VPAS but lots of other
issues. My role, and that of my counterparts in other Government
Departments —in fact, of all those involved in life sciences—is
to ensure that we are giving them the tools in the arsenal to go
to their global boards and make the case, as I know they want to,
for investment in the United Kingdom. As the hon. Gentleman set
out, there is global competition, and to some extent we are
falling behind. We need to address that.
Why do life sciences matter? Why is this so important? There are
three reasons. First, it is important for UK plc, as has been set
out already. It is an enormous investment and part of the UK
economy. Of course, it could be so much bigger. That is why it is
so important that we continue to encourage life sciences
investment in the UK. The second reason is its importance to
patients, as the hon. Member for Bristol South set out. This is
about ensuring that patients across our NHS get access to the
most innovative and cutting-edge medicines that exist globally,
and that we are getting UK patients access to them as quickly as,
or quicker than, anywhere else.
The third reason, which the hon. Lady also touched on, is that
the NHS is under considerable pressure. Some of the challenges
that it faces will be addressed by more funding, and some by
workforce. Those things will be very important here and now, and
in the medium term. However, if we want to address the challenges
that the NHS faces in the long term, that depends on genomics and
gene cell therapy, and on investment in innovation and
transformation around pharma, med tech, systems and AI. Ensuring
that the UK is an attractive market for investment is really
important to the future of the NHS, and we have world-leading
academic and scientific expertise, as the hon. Member for
Cambridge set out. We have a competitive tax regime, and a health
system that is committed to acting as a good innovation partner.
Can we do better? Yes, of course, but it is a good innovation
partner. We have to unlock the transformative power of real-world
data—something that the NHS is unparalleled in being able to
provide.
Despite the relatively gloomy picture that my hon. Friend the
Member for Newton Abbot set out, there are huge signs of hope.
Take the recent investment and deals that are coming to the UK
from Moderna or BioNTech. These are huge investments in UK plc
and UK life sciences, which we should be very proud of. Of
course, we want to see far more. We also have some exciting
opportunities, as my hon. Friend set out, through the
O’Shaughnessy review and our desire to massively turbocharge
clinical trials in the UK. As my hon. Friend and the hon. Member
for Cambridge pointed out, we are losing market share to other
countries across Europe. If we look, however, at foreign direct
investment, in 2021 it was £1.9 billion from 49 projects, coming
in only behind the United States in terms of value—a significant
increase. Furthermore, the UK life science industry raised £7
billion in equity finance. It was placed third behind only the
USA and China.
I can make the case for UK life sciences—it is a strong one—but
we have to do better. We have to always continue to drive
forward. I understand the influence of boardroom sentiment, which
the hon. Member for Cambridge set out, and that price regulation
schemes such as VPAS have to be a consideration in the decision
to locate investment. That is exactly why we are committed to
agreeing a deal.
The Minister is giving a very thorough reply. I wonder whether he
will acknowledge—I have not heard him concede this point—that the
26.7% factor is a real problem that needs to be addressed.
I thank the hon. Gentleman; I am going to come to that exact
point. I want to respond to as many of the issues as possible,
and—rarely for a Westminster Hall debate—we actually have a
little time.
We are committed to agreeing a deal that supports a strong UK
life sciences sector and drives economic growth through
investment, but I recognise what my hon. Friend the Member for
Newton Abbot says: we have to do far more in many other
areas—clinical trials, regulation, the life sciences missions and
the investment therein. There is also the ongoing work around
uptake.
The hon. Member for Cambridge talked specifically about the
higher VPAS percentage rates, so let me move on to those
directly. Of course I understand the industry concerns about
higher payment rates, but it is important to stress that those
were projected when the scheme was agreed—they were agreed with
industry and negotiated by the ABPI on behalf of industry. They
reflect the scheme working as intended: to limit to 2% the annual
growth in the sale of branded medicines within the NHS.
We are firmly committed to VPAS and to continued working with the
pharmaceutical industry to create an environment that facilitates
innovation and maintains the UK’s world-leading position in the
life sciences sector. I remain hugely grateful to industry for
its continued participation in VPAS, which has offered
much-needed financial security to our NHS during a period of
significant economic uncertainty.
rose—
Let me conclude the point, as I may well answer the hon.
Gentleman. He has pushed me on the negotiation that we are about
to start—on our mandate and where we would aim to get to. The
scheme ends at the end of this year and the negotiations for the
successor scheme start tomorrow. As I have mentioned, what I can
say today is limited by commercial sensitivity. The negotiations
will be overseen by Sir Hugh Taylor, which is hugely welcome—he
brings a wealth of experience and expertise that will be of
immense benefit and, I genuinely believe, will ensure that we
continue to get the best outcomes for patients, the UK life
sciences sector and the taxpayer.
But in response to the hon. Gentleman’s question, I should say
that we are very much open to ideas about how a successor
voluntary scheme should operate from 2024 onwards. I look forward
to working with industry, as I know Sir Hugh does, to agree a
mutually beneficial scheme that supports the sustainability of
the NHS spend on branded medicines, which is critical, and also
improves patient outcomes and facilitates a stronger UK life
sciences industry.
This is my final intervention, I promise —I am grateful. I think
I heard the Minister say that the scheme was working as intended.
There is not much transparency in this process, for reasons that
are perhaps understandable, but my understanding was that the
current situation was not really anticipated when the scheme was
drawn up and that a range of things in between have led to it.
Will he clarify that point?
I am happy to. I will answer by making two points. The first is
that the situation was entirely predicted. Forecasts and
projections were given; whether industry believed them to be
possible is another matter, but my understanding—the scheme was
negotiated several years ago, prior to my time as a Minister in
the Department —is that it was projected that we could have got
to this point through growth. Growth has been significant, which
is why it is important that we negotiate a new scheme that takes
on board industry’s concerns. More broadly, we have talked a bit
about medicine pricing and it is important to stress
international comparisons.
I apologise for interrupting the Minister’s flow. He is right
that there was a forecast, but my understanding is that it was
wrong and that there was an under-growth in all those years bar
one. The consequence was that it was not possible for industry to
have the predictability that he outlines. Forecasting will
clearly always be a challenge, but, as I understand it, in this
case it did not give industry what it needed.
I hear what my hon. Friend says, but we are talking about what is
now history. I do not think anybody is realistically advocating
any kind of change to the existing VPAS scheme—in effect, we
would be saying that there would be a retrospective rebate to big
pharma, despite what was agreed and negotiated. I do not think
anyone here is proposing that today. What we are proposing is
something that we get right—something that is totally transparent
and open for the future in the new VPAS scheme. I know that
getting this absolutely right will be at the forefront of the
minds of the ABPI and industry as we approach new
negotiations.
I want to briefly touch on international comparisons. While
direct comparisons of rebate rates can be misleading —as has
rightly been pointed out, they are not necessarily as clear
internationally and there are differences in the structure of
systems between countries—we none the less continue to monitor
and consider UK spending on medicines in an international
context. It is important to point out that the UK is around the
median for spending on medicines per capita among comparable
countries in Europe. We tend to spend the same as or more than
Denmark, Sweden, Portugal, Spain and the Netherlands, and less
than Germany, France and Italy. It is important to provide
context.
I come back to the initial point: as important as medicines
pricing is, it is part of a wider bricking-up of a UK environment
on which global boards will make a decision as to whether the UK
is a good place to invest. Yes, we take this matter very
seriously. However, as important as VPAS is, I am equally
concerned by and keen to address some of the other issues that
industry is rightly pointing out. Understandably, given that we
are just about to start negotiations and its importance to
industry, the issue of the day is VPAS. However, I know how
interested industry also is in getting our regulation right, in
our speed in setting up clinical trials and our ability to get
patients on to clinical trials, and the uptake of new and
innovative medicines and medtech into our NHS. Those are huge
issues for industry too, and they are areas I am focusing on.
I am conscious of the need to give my hon. Friend the Member for
Newton Abbot time to wind up, so I will conclude by once again
reassuring her and Members from across the House that the
Government are committed to a mutually beneficial voluntary
scheme that supports patient outcomes, a strong, thriving life
sciences industry here in the UK and—vitally—a financially
sustainable NHS. We can all agree that this scheme is vital to
keeping the branded medicine bill affordable for our NHS and
ensuring that the UK life sciences industry can earn the money it
needs to fund research and development into the new and improved
medicines of the future. We cannot overestimate the impact that
the scheme has had for thousands of patients by ensuring that
they have rapid access to new life-saving and life-extending
treatments. We remain firmly committed to VPAS and to working
with the industry to deliver a new branded medicines agreement. I
will ensure that we put patients’ needs at the forefront of these
discussions and at every step of the process.
5.52pm
As has been rightly said, we are encroaching on recess time, so I
am grateful to all contributors for still being here. This has
been an important debate, and one thing is clear: there is more
agreement than disagreement on what we want to achieve. We all
want growth in the UK economy and to see medicine prices set in
such a way that they are affordable; however, we also want to
ensure that the system is a partnership and that we do not
disincentivise the very investment that makes all this
possible.
I am heartened by what the Minister has said. I understand, of
course, that this is not a simple, binary negotiation about
medicine prices as against the life sciences vision. Indeed, in
my proposals, all the things the Minister set out as issues for
industry are things that should and could be part of the VPAS
debate. The reason is that it is the only debate where Government
and industry agree between them what they are going to do—there
is no other opportunity. I urge the Minister to make the most of
it by ensuring that all the things he says, and I agree, that
industry wants—quite apart from the specifics of what the
medicine pricing mechanism will be—are debated in the round. I am
sure that Sir Hugh Taylor will do a first-class job supervising
that, and I am delighted to hear that we have somebody
independent. I will close on that note, and thank you, Mr Sharma,
for your indulgence in allowing us to sit into recess.
Question put and agreed to.
Resolved,
That this House has considered the voluntary scheme for branded
medicines and the Life Sciences Vision.
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