Time to take on the pharma lobby and get fair pricing for the NHS
By: Alena Ivanova
Date: 14 April 2023
Campaigns: Pharma
While the cost of living has added extra urgency to NHS staff demands for better pay and conditions, the crisis in NHS funding is nothing new. Years of underfunding have led to ever more shameful records on waiting times, service cuts and unprecedented numbers of workers leaving the NHS.
But unlike nurses, doctors or patients, one group has been doing very well financially – the pharmaceutical industry. Many posted record profits amidst the uncertainty of the Covid-19 pandemic. And even before this crisis, pharmaceutical companies were already some of the most profitable in the world, boasting greater profit margins than even the finance or energy industries. Research by the British Medical Journal has revealed that even if drug companies lost a fifth of their profits, they would still outperform 75% of other sectors.
And when it comes to the NHS, our spending on drugs is increasing at an alarming rate. Currently, a pricing scheme called VPAS is making sure that the overall bill for branded drugs sold to the NHS doesn’t go up by more than 2% each year, with any excess profits paid back by companies. Still, in 2021-2022 the cost of medicines and medical devices in England increased by more than 8%, the biggest rise in at least five years. As it stands, pharma companies will have to pay back the extra 6% as a result of the NHS pricing deal. But this scheme is running out this year, and pharma companies are busy lobbying to water down the next deal.
The Association of British Pharmaceutical Industry (ABPI) has been briefing heavily with doomsday projections about loss of investment, research and development footprint and overall collapse of the life sciences sector in the UK unless pharmaceuticals are allowed to charge higher profits. In an effort to force the government’s hand, some industry representatives have already quit the voluntary pricing scheme to demonstrate their strength of feeling. Among those is Chicago-based pharma giant AbbVie who owned the rights to Humira, consistently the best-selling drug from 2014 to 2020. Despite these incredible sales, however, AbbVie consistently has one of the smallest R&D budgets among comparable companies, ranking 10th in 2022. AbbVie spent $6.51 billion in R&D last year, down 6% compared to 2021. This represents a meagre 11.2% of AbbVie’s total revenue, also the lowest among the top 10 pharma companies.
The industry’s counter proposals made by the ABPI seek to replace the current VPAS scheme, with a much lower tax regime. This year’s VPAS scheme is set to recoup £3.3 billion in excess profits from the pharmaceutical industry, while the proposals from the ABPI would see annual returns plummet to around £1.2 billion.
This would mean, on the basis of last year’s figures, an additional £2.1 billion is returned to pharmaceutical companies rather than spent on vital health services. The proposals from the pharmaceutical industry amount to little more than a demand for more profits, at a time when their global annual revenues have hit a record $1.48 trillion – $204 billion more than they were making in pre-pandemic 2019. Pharma argues that it needs its eyewatering profits in order to make new drugs, but most firms spend more on share buybacks and marketing than they do on research and development.
If they succeed in diluting the deal, big pharma will have every incentive to raise prices of new drugs even higher in future. Moreover, despite making threats about market withdrawal, pharmaceutical companies already benefit from highly preferential arrangements. They benefit hugely from substantial public funding into universities or small biotech companies who develop the initial stages of many breakthrough pharmaceutical products. Yet by swooping in and buying out projects with promising results, pharma companies privatise this research, benefitting from lower risk. For example, Abiraterone, a prostate cancer drug, was developed with heavy financing from the UK’s Medical Research Council, but the NHS has often had to ration access to it because of its excessive cost.
In this context, resisting the corporate agenda of these companies is about more than cost effectiveness. Our existing model is not delivering the results we need. We must prioritise public health and public healthcare systems. We need research into the conditions that impact people the most, not those that deliver greatest profit. We need a way to deliver quality and affordable medication to all who need it across the world. And we need public funding to support well-paid secure jobs in public health for all NHS staff, and medical staff across the world, and not increase the obscene profits of corporations for the benefit of CEOs and shareholders.
We are part of a global movement against rising drug prices and the continued impunity of pharma companies. Even in the US, notoriously the bastion of profit-driven healthcare, legislators are waking up and taking action to curb the excesses of this industry. And in a rare positive sign, the UK government has branded the demands of pharma as ‘completely unaffordable’.
Together we can demand the UK government holds firm and resists corporations blackmail. This would be a long-overdue first step towards putting our NHS and our health workers ahead of the interests of CEOs and shareholders.
Write to the Department for Health today and tell them to not to let big pharma hold the NHS to ransom.
