UK pharmaceutical deal was vital – but GSK boss is right about US dominance | Nils Prattley
TIt’s gratitude, right? It has not even been a fortnight since the government agreed to increase the prices paid by the NHS for new drugs and here the boss of GSK, the second largest British pharmaceutical company, has come to extol the virtues of doing business in the United States.
The United States is “still the number one market in the world in terms of launching new drugs and vaccines,” Chief Executive Emma Walmsley said in a BBC interview, explaining why GSK invests around three times as much there as at home. Alongside China, the United States is also “the best market in the world to do business.”
His comments caused a sensation but are in reality only a statement of reality. It would be absurd to claim that the UK has suddenly risen to the top of the life sciences competitiveness rankings following the multi-pronged deal on prices and tariffs reached earlier this month.
Yes, the UK retains excellent research facilities, university links and other ‘ecosystem’ benefits – successive governments’ boasts that the UK is a life sciences ‘superpower’ are not entirely fanciful. But the United States remains ahead in terms of spending on new drugs, the depth of its research and manufacturing bases, and the funding its startups and biotech companies can raise. This is how things happen.
But, as Walmsley also said, this month’s deal on NHS prices and rates is welcome. Critics lament that these terms represent a capitulation to big pharmaceutical companies and Trump. But what else was the government supposed to do? If he is serious about the “superpowers”, he has had to avoid the tensions that existed long before the president threatened to impose exorbitant tariffs on British pharmaceutical exports to the United States.
The rows over NHS prices were clearly linked to the loss of investment in the UK, such as Merck’s demolition of a £1 billion research center in London. One of the problems was the complex system of “voluntary” prices, which attempts to promote innovation while protecting the NHS budget via a cap. Rebates paid by companies have been unpredictable and last year’s amount amounted to 23% of sales, well above comparable rates in other major European countries. The other issue is the price the National Institute for Health and Care Excellence (Nice) allows the NHS to spend on life-prolonging drugs.
The agreement grouped the articles together. The UK won no tariffs on exports to the US for three years. The price discount has been capped at 15%. And Nice raised its reference price thresholds by 25% at the bottom of the scale.
Report complaints about the diversion of NHS budgets from frontline equipment and hospitals. Yes, it is definitely a risk: health service pharmaceutical spending will increase by £3 billion a year. But the alternative was to cut investment in the UK, which could create even more pressure on budgets over time and even less patient access to new medicines. In a world of compromise and a delicate negotiating position, the government appears to be in just about the right place. An agreement had to be reached, as has been argued several times here.
Walmsley called it “a step in the right direction,” which is positive but doesn’t give five stars. That’s probably also right. The plan is for the UK to double the percentage of GDP spent on new drugs to 0.6% over a decade, allowing enough time for tensions to flare again. At the same time, the terms of the “voluntary” program for post-2029 must also be negotiated.
But other projects are happening behind the scenes, such as the £600m-funded Health Data Research Service, which aims to “boost access to NHS data for researchers” by harnessing the strength of the health service as a unified system. At a time when the government’s industrial strategy seems to be moving slowly on several fronts, the situation in the life sciences sector could easily have been worse. It’s just that the pull of the United States will undeniably remain strong.
