Big drug firms accused of ‘ripping off NHS with £12 billion excess profits’
Date: 12 July 2023
Campaigns: Pharma
- New figures show the NHS could have saved £12 billion on just 10 medicines over the last decade
- Big Pharma are lobbying against a drugs pricing system that has already helped the NHS save £7 billion in the past five years
- Big pharma companies charging huge mark-ups of up to 23,000% above production cost on key drugs, even assuming a reasonable profit margin of up to 50%
- “Money we need to keep the NHS going is being poured into pockets of wealthy shareholders”
New figures show that NHS England has spent £13 billion on just ten super-expensive medicines in the 10 years leading up to 2022. Research also reveals that – despite the cost saving measures that are currently in place – pharmaceutical companies have extracted an estimated £11.9 – 12.6 billion of excess profits from the NHS through these drugs.
The excess profits described in the report represent mark-ups above the estimated cost of producing the drugs plus a “fair” profit margin of up to 50%. Even after accounting for reasonable levels of profit, the research finds that the NHS is being charged astonishing prices for key drugs. This includes an estimated mark-up of 23,000% on cancer drug lenalidomide, even assuming a reasonable profit margin of up to 50%.
We calculate that the NHS has secured savings of £9 billion on the ten most expensive drugs over 10 years through collective negotiation through NICE and with the voluntary scheme for branded medicines pricing and access (VPAS). The government says that VPAS has saved the NHS more than £7 billion on drugs between 2018 and 2023. But big pharmaceutical companies are lobbying against VPAS, with Eli Lilly and AbbVie having this year withdrawn from the agreement as the industry demands even greater profits from the NHS.
While the huge mark-ups on the 10 drugs analysed in this research already reveal a deep and unnecessary toll on the NHS, they represent a small fraction of the UK’s overall outlay on medicines, which reached an annual spend of £17.2 billion in 2022.
Health campaign groups Global Justice Now, STOPAIDS, and Just Treatment have called the figures evidence of profiteering, as the drugs – used by the NHS to treat cancers, arthritis and for blood clot prevention – could have been made for a small fraction of the price charged to the NHS. With pharma giants locked in a dispute with the government over medicine prices, campaigners claim the situation will only get worse for the NHS unless we change the way we make medicines.
Drug companies often claim high prices are justified by the high costs of inventing new drugs. But we find that each of the 10 drugs analysed in this report benefited from work by scientists from public institutions, from public funding, from charitable funding or in some cases a mixture of all three. Very few of these drugs could reasonably be said to have been fully invented by the companies that now market them.
Examples include:
- Anti-inflammatory drug Adalimumab, which cost NHS England £2.7 billion over 10 years, helping to make pharma giant AbbVie $208 billion in global sales to date. AbbVie didn’t invent the drug, instead acquiring the knowhow and charging eye-watering prices.
- Anti-cancer drug Revlimid, a modified version of thalidomide, which is marketed by a subsidiary of Bristol Myers Squibb, but whose owner, according to a US government investigation “benefited from the acquisition of a decades-old product, academic and non-profit research, and at least eight federally funded studies.”
With government funding for research and development likely to increase in the coming years, campaigners are demanding a new model for making medicines which includes strict conditions on the use of medicines made thanks to public money to safeguard affordability and sharing of medical knowledge. They also call for more public manufacturing capacity and enforcement of anti-monopoly powers to prevent the dominance of a handful of massive players.
Nick Dearden, Director of Global Justice Now, said:
“These figures show that we have a broken model of producing medicines, with pharmaceutical companies ripping off the NHS at every turn. Unless we fix it, our health system could be at risk.
“Currently, money we need to keep the NHS going is being poured into pockets of wealthy shareholders of big drug corporations. If we want new, breakthrough medicines, which benefit all of us, we need to put a stop to this profiteering and take control of medicines which, very often, public money has already helped to create.”
Mike Podmore, Director of STOPAIDS, said:
“For 75 years, the NHS has provided a world-class public health service, universally available and free at the point of use. But, after more than a decade of cuts, pay restraint, and creeping privatisation, the service has been pushed to the brink – and the growing cost of brand name drugs could knock it over the edge. As shocking as these figures may be, they look only at ten drugs. If Big Pharma gets its way, the NHS will crumble under the total cost.”
Gayle Pledger, Just Treatment Senior Organiser and parent of a child with cystic fibrosis, said:
“These drug companies hold incredible power as the monopolies they’ve secured on lifesaving medicines means they can hold patients’ lives to ransom to extract the highest possible price from the NHS. Lives like that of my daughter. We had to fight for years to get cystic fibrosis patients in the UK access to lifesaving medicines at a price the NHS could afford. We can’t allow these same drug companies to now hold the entire NHS to ransom in an effort to further boost their already excessive profits. It’s vital we make a stand to protect our health service and the health of all patients.”
Sonia Adesara, NHS doctor and campaigner, said:
“This research shows that the prices pharmaceutical companies charge the NHS have little to do with the cost of producing medicines. The markup on these 10 drugs alone is enough money to cover pay restoration for junior doctors. Instead of battling with health workers who are struggling to keep up with the cost of living, the government should be trying to claw back the rip-off prices charged by pharmaceutical companies.”
/Ends
Top 10 medicines by total cost to NHS England over 2012-22
| Rank | Medicine | Total at indicative price (GBP)* | Estimated cost after confidential discounts (GBP)** | Savings over 2012-22 if available at cost-based prices – Lower estimate (GBP)*** | Savings over 2012-22 if available at cost-based prices – Upper estimate (GBP)*** |
| 1 |
adalimumab (anti-inflammatory including for arthritis) |
4,618,214,289 | 2,724,746,431 | 2,501,532,740 | 2,647,776,192 |
| 2 | aflibercept (colorectal cancer) | 3,053,371,007 | 1,801,488,894 | 1,786,868,635 | 1,795,956,904 |
| 3 | etanercept (arthritis) | 2,318,608,049 | 1,367,978,749 | 1,106,711,208 | 1,278,401,306 |
| 4 | infliximab (arthritis) | 2,113,813,123 | 1,247,149,742 | 1,019,797,398 | 1,170,381,418 |
| 5 |
ranibizumab (age-related macular degeneration) |
1,839,452,710 | 1,085,277,099 | 1,076,599,696 | 1,081,959,269 |
| 6 | pembrolizumab (cancer) | 1,849,390,089 | 1,091,140,153 | 1,065,150,245 | 1,082,229,327 |
| 7 | apixaban (blood clots) | 1,743,241,750 | 1,028,512,632 | 985,304,070 | 996,826,354 |
| 8 | lenalidomide (cancer) | 1,562,760,029 | 922,028,417 | 918,096,359 | 919,144,908 |
| 9 | trastuzumab (cancer) | 1,428,348,262 | 842,725,474 | 604,729,872 | 762,363,323 |
| 10 | rivaroxaban (blood clots) | 1,460,916,685 | 861,940,844 | 822,049,164 | 832,686,945 |
| Total | 21,988,115,991 | 12,972,988,435 | 11,886,839,387 | 12,567,725,946 |
Notes for the editor
The full report is available here: https://www.globaljustice.org.uk/wp-content/uploads/2023/07/Bitter-Pills-Why-the-NHS-cant-swallow-big-pharmas-profiteering.pdf
Calculations
Using the methodology described below, the total cost paid by the NHS of the 10 drugs is £12.97bn, and the total cost of manufacture is estimated at £1.09bn. On this more conservative estimate, this means the NHS could have saved £11.9bn even while the companies made a 50% profit margin on the drugs.
An estimate in which the companies made a 10% profit margin on the drugs would see a total cost of manufacture of £405mn, with even higher potential NHS savings of £12.6bn.
Manufacturing costs methodology
- Data on sales of the raw, unformulated pharmaceutical (active pharmaceutical ingredient, API) were extracted from a proprietary database of exports from India.
- Data on API costs were available for rivaroxaban, apixaban, and lenalidomide, but were not available for the other 7 drugs, that is, the biologics. Estimates for the cost of API for biologics can be made using reported ranges of mAb manufacturing cost per gram.
- Assumptions for formulation costs, ‘fair’ profit margins and logistics were made accordingly:
- Formulation costs (in vial or pre-filled injection) of $1-2.5 per unit for injectable formulations
- A margin for logistics of 20%
- A profit margin of 10-50% (at the bottom of our cost of manufacturing range, a 10% profit margin is assumed. At the top of the range, 50% profit margin is assumed)
- Costs of R&D (or biosimilar development) are not included in the estimated cost-based prices, though for many or all of these drugs, originator R&D costs will likely have been recouped in the first years of sales.
- Comparison of current prices to estimated cost-based prices reveals that, for most medicines, a policy approach enabling early or immediate generic/biosimilar entry, and robust competition, could (have) allowed billions in savings.
- This method of production analysis has been peer reviewed in several papers. Please see section 3 of the report for more details.
Estimation of confidential discounts
- ABPI and DHSC publish joint top-level data on the magnitude of confidential discounts.
- Table. Total NHS medicines expenditure at list prices versus actual (confidentially discounted) prices, 2018-2021, GBP billions.
| 2018 | 2019 | 2020 | 2021 | |
| Cost at list price | 17.2 | 18.8 | 20.3 | 22.9 |
| Branded medicines sales after confidential discounts | 11.6 | 11.8 | 12.2 | 13.4 |
| VPAS+SS payments | 0.638 | 0.931 | 0.597 | 0.585 |
| Net cost after subtracting confidential discounts and VPAS+SS payments | 10.962 | 10.869 | 11.603 | 12.815 |
For more details, see methodological index: https://www.globaljustice.org.uk/wp-content/uploads/2023/07/Bitter-Pills-Why-the-NHS-cant-swallow-big-pharmas-profiteering.pdf
The publishing organisations
Global Justice Now is a UK campaign to tackle the root causes of global poverty and inequality.
Just Treatment is a patient-led campaign fighting to ensure everyone gets the healthcare they need by challenging the power of the pharmaceutical and health industries, and demanding that the government acts to put patients before corporate profits.
STOPAIDS is a UK-based HIV, health and rights network that supports UK and global movements to challenge systemic barriers and inequalities to end AIDS and ensure people around the world can realise their right to good health and wellbeing.
Photo: Adam Gilchrist/Shutterstock
