NHS rebates threaten UK pharmaceutical innovation growth

Britain’s largest pharmaceutical companies have raised urgent concerns over what they describe as an “excessive” NHS sales rebate, warning it is harming investment in an economically crucial sector. Industry leaders from AstraZeneca, GlaxoSmithKline (GSK), Johnson & Johnson, Pfizer, Novartis, Merck, and Sanofi have urged the government to make revisions to the branded medicines repayment scheme to maintain international competitiveness.

The voluntary scheme for branded medicines, introduced in 2023 to cap total NHS spending on branded drugs, requires manufacturers to repay any excess sales above the agreed limit. However, industry executives argue the repayment rates have grown unsustainably high, threatening the UK’s appeal as a hub for pharmaceutical innovation.

A recent report from the Association of the British Pharmaceutical Industry revealed that repayment rates for newer medicines are expected to reach 22.9 per cent this year—significantly higher than the 15.1 per cent seen last year and the average 7 per cent rate between 2014 and 2021. By comparison, countries like France, Germany, and Ireland have markedly lower payment rates, ranging from 5.7 per cent to 9 per cent.

Pharmaceutical leaders have emphasised the detrimental impact of these figures. According to Tom Keith-Roach, President of AstraZeneca UK, the rebate scheme does not align with the government’s ambitions for the sector. He called for a “substantive and long-term commitment” to improve the commercial environment to ensure the UK remains globally competitive in life sciences.

The challenge extends beyond financial pressures. Bosses have warned of a decline in clinical trials, slower launches for innovative medicines, and concerns about retaining a skilled workforce. Kylie Bromley, Managing Director of Biogen UK, said the rates are already having a “major impact” on the company’s UK investment and operations.

Despite criticism, the scheme retains government support, with officials citing increased patient access to new treatments as a key benefit. A Department of Health and Social Care spokesperson stated that the voluntary agreement ensures sustainability for the NHS and taxpayers. Ministers have reportedly been engaging with the pharmaceutical sector to explore collaboration opportunities and strengthen the UK’s position as an innovation leader.