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Pharma Industry Criticizes UK Drug Pricing Scheme, Cites Investment Roadblocks

In a joint statement on Thursday, the Association of the British Pharmaceutical Industry (ABPI), which includes major companies like AstraZeneca, Roche, and Pfizer, called for urgent reforms to the five-year agreement established in late 2023.

• By Newsdesk
• New Delhi
• Mar 21, 2025

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The pharmaceutical sector has strongly criticized the UK government's pricing agreement designed to manage the National Health Service's (NHS) drug expenses, labeling it as unsustainable and a significant barrier to future investments.

In a joint statement on Thursday, the Association of the British Pharmaceutical Industry (ABPI), which includes major companies like AstraZeneca, Roche, and Pfizer, called for urgent reforms to the five-year agreement established in late 2023. The industry group argued that the financial strain from record-high rebates is making it increasingly difficult for companies to sustain operations and consider further investments in the country.

Under the current Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG), pharmaceutical firms are required to return a staggering 25% to 33% of their UK drug sales revenue to the NHS. This marks a sharp increase from the approximately 5% rebate rate seen in 2021 under the previous agreement.

While the UK government has identified life sciences as a key growth sector for its new industrial policy, the ABPI warned that this vision is unlikely to materialize without amendments to the rebate system. Industry representatives argue that the existing framework is driving companies away from investing in research, manufacturing, and development within the UK.

Tensions between the pharmaceutical industry and the government over pricing regulations are longstanding. British drugmakers, including GSK and AstraZeneca, have voiced concerns over the UK's business climate for years. In a notable example, AstraZeneca abandoned plans to invest £450 million ($585 million) in a vaccine manufacturing plant in northern England earlier this year, citing a reduction in government support.

As the debate over drug pricing policies continues, industry leaders are urging policymakers to consider alternative approaches that balance cost management with maintaining a competitive investment environment. Without such adjustments, the UK risks losing further pharmaceutical investments to other countries with more favorable business conditions.

(With inputs from Reuters)