Revenue Clawback Rate Increase Warned By ABPI In The UK

The Association of the British Pharmaceutical Industry (ABPI) has urged the government to take prompt action in response to the planned UK statutory revenue clawback rate increase for branded medications.

The Department of Health and Social Care (DHSC) is now conducting a significant consultation over proposals to increase from 24.4% to 27.5% of the statutory revenue clawback rate paid by businesses subject to the Statutory Scheme for branded medications. It’s approximately three times what companies may have predicted only a few years ago.

The Association of the British Pharmaceutical Industry (ABPI) cautioned that the anticipated rate hike could send the wrong signal to global investors and boardrooms at a time when the UK life sciences sector is already facing substantial problems.

The pharmaceutical sector prefers that the statutory scheme rate remain fixed. It will give the government and industry time to finalise critical discussions on the new voluntary scheme. The ABPI has requested that the current tariff be phased down at the end of 2023 to avoid further lowering prospective long-term life science investment in the UK. Once a new framework has been established, a fresh rate can be zeroed upon at the year’s end.

The hike is intended to imitate a similar record clawback rate increase from 15% to 26.5% announced last year under a comparable Voluntary Payment Assistance Scheme (VPAS). The agreement states that any medicine used by the NHS that exceeds a 2% nominal growth cap is completely subsidised by the industry. Before the pandemic, there had been an average clawback rate of 7%. Worldwide pharma R&D in the UK has decreased over the last 10 years dipping from 2012’s 4.9% to 3.2% in 2022.

Patient access to industry clinical trials has decreased by 44% vis-à-vis 2017/2018. While significant gains have been made as a result of restricted NHS England access accords, unjustified variation in the medicines supply across the UK persists. Two years after a drug’s introduction, the NHS in the UK is often behind other countries by 64% when it comes to using NICE-recommended medications.

Medicines spending will have fallen by 12% in real terms between 2019 and 2023. During this time, the government has increased funding to the NHS by 8%. The ABPI highlighted that the recent policy has resulted in disinvestment in medicines due to a decade-long growth cap.

In comparison to other main EU countries such as Italy, Spain, Germany, and France, the UK has had the greatest fall in its global proportion of new pharmaceutical launches between 2016 and 2021. The drop in pharmaceutical spending is affecting patient outcomes in the United Kingdom. Future negotiations between business and government will be cantered on developing a new, sustainable framework that supports the Life Sciences Vision’s ambitious goals, produces top-notch patient outcomes, ensures the financial viability of the NHS, and creates a sustainable sector that can continue to invest in tomorrow’s drugs and vaccines.

The government must take advantage of this chance to demonstrate that it comprehends the true issues affecting their industry and that it is prepared to collaborate with them to solve this system and let UK return to the path of innovation-led growth, said Richard Torbett, Chief Executive of the ABPI.