There is no ‘magic wand’ for financial pressure, Hunt tells pharmacy groups

UK Chancellor Jeremy Hunt has told drugmakers that the government has no “magic wand” to deal with financial pressures and is unlikely to give in to industry demands to pay significantly higher prices for drugs.

The government will unveil £650m worth of reforms on Friday to boost the life sciences sector as part of a wider package of measures.

Drug manufacturers have condemned the government for increasing tax on drug sales to the NHS from 5.1 per cent in the past two years to 26.5 per cent. They argued that low prices meant the UK was losing out on investment in innovation.

The levy, or the Voluntary Scheme for Price and Access to Branded Medicines (Vpas), aims to limit the NHS’ drug bill.

The chancellor and other ministers met on Thursday with the heads of pharmaceutical companies including AstraZeneca and GSK to discuss proposals to boost growth in the life sciences sector, which is worth £94bn to the UK.

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According to Hunt, drug manufacturers knew that the prices paid for NHS drugs would remain lower than in other countries.

“[Pharma companies] they recognize that the NHS will continue to receive the cheapest prices worldwide for medicines because it is the sole payer of one of the world’s largest health systems.

“I’m very honest with the pharmaceutical companies that we don’t have a magic wand to deal with this financial pressure. Responsible public finances are essential if we want to achieve economic stability.”

Hunt said the Government wanted to work with companies to find a “win-win” solution as they negotiate a deal on the NHS Medicines Act over the coming years.

The announcement comes after US drugmaker Eli Lilly, which develops innovative drugs to treat Alzheimer’s disease and obesity, said it was suspending a potential investment in London.

Eli Lilly said it was considering other European locations because of the “stifling trading environment” in the UK.

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UK Chancellor Jeremy Hunt © Aaron Chown/PA Wire

“In the short term, negotiating a new and sustainable pricing agreement that unlocks the growth potential of our sector is key to restoring the UK’s international competitiveness and attracting future investment,” it said.

Ministers also unveiled £121m of funding to revive commercial clinical trials run by the NHS, some of which had already been announced.

The government has also committed £250 million to encourage pension schemes to fund UK science and technology companies.

In a government-commissioned report published on Friday, former life sciences minister Lord James O’Shaughnessy made recommendations to tackle the dramatic decline in the number of commercial trials in the UK, including paying GPs to take part in clinical research.

Hunt supported O’Shaughnessy’s goal of quadrupling the number of patients in clinical trials by 2027. The government also accepted its recommendations to reduce the approval time for commercial trials to 60 days and to establish a single contract for NHS-wide research.

Richard Torbett, chief executive of the British Pharmaceutical Association, said the measures showed the government had listened to the industry.

But he added that research development is “only one part of the equation.” “To bring innovative medicines to patients and fully seize the opportunity for growth, we also need to improve the commercial environment.”