HMRC PAUSES VAT ON FREE POSTTRIAL DRUGS AS PHARMA INDUSTRY PROTESTS

HM Revenue and Customs has announced a pause in enforcing VAT charges on medicines supplied under early access schemes, amid rising concerns from the pharmaceutical industry. The decision comes after protests regarding the taxing of free medicines, prompting discussions between the government and major drug companies.

The scheme allows patients suffering from life-threatening or debilitating conditions to access medications that lack formal marketing authorisation or NHS funding. However, the industry has raised alarms about the impact of VAT liabilities on the UK’s attractiveness for clinical trials. Leading firms, including Bayer, have already halted new patient enrolments in these schemes, citing the additional financial burdens imposed by VAT.

HMRC has been issuing VAT bills to companies providing these drugs at no cost, alarming pharmaceutical executives. Industry leaders have indicated that the financial implications may deter companies from conducting trials in the UK, as the additional costs compromise their ability to support patients following trial completion.

The government is currently in discussions with the pharmaceutical sector. Treasury officials recently engaged with industry leaders to assess the situation. While HMRC has reiterated its obligation to protect revenue, it has also communicated its willingness to extend review periods and delay enforcement of tax decisions during these discussions.

Despite the pause on enforcement, HMRC has maintained its stance on past tax liabilities. The pharmaceutical industry is seeking clearer guidance to ensure that free-of-charge supply for clinically justified reasons does not trigger VAT liabilities.

At a recent meeting, Julia Lopez, shadow science, innovation and technology secretary, voiced concerns about the UK’s reputation as a centre for clinical research. She emphasised the importance of maintaining this status for the country’s life sciences sector.

In response, Lord Vallance, the science minister, acknowledged the significance of these issues and affirmed the government’s commitment to ensuring patient access to innovative medicines. Discussions with stakeholders continue, with a focus on preserving early access and compassionate use schemes in the UK.