The head of pharmaceutical giant Eli Lilly has said the UK is “probably the worst country in Europe” for drug prices. Speaking to the Financial Times, Dave Ricks warned Britain would miss out on new drugs and investment if it did not raise prices and rethink the current rebate scheme.
How are prices set?
The Voluntary Scheme for Branded Medicines Pricing, Access and Growth, or VPAG, was created to keep NHS costs down. Running from 2024 to 2028, it sets a cap on what the health service pays for new medicines. If NHS spending exceeds this cap, drug companies must repay a percentage of sales revenue back to the government.
Why is this bad?
This year the rebate for newer branded drugs rose to almost 23% after NHS spending on the medicines grew much more than expected. Ricks said this “clawback scheme” effectively “charges us for our own success” and should be scrapped.
The result has been a pause to almost £2 billion in planned investments in the UK, with patients potentially missing out on new drugs, pharmaceuticals warn. In a possible sign of things to come, last month Eli Lilly raised the UK price of weight-loss drug Mounjaro by 170% for those who buy it privately.
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What next?
Keir Starmer told the pharmaceutical industry in May that the UK would pay more for medicines in the future, following a commitment to “improve the overall environment for pharmaceutical companies” as part of a UK–US trade deal. However, negotiations over VPAG remain at an impasse.
