So, George Osborne has delivered the first truly Conservative budget for 19 years and it included a number of the twists, turns and intelligent political manoeuvres that George Osborne has become known for during his time as Chancellor of the Exchequer.
However, there was very little of interest or benefit to research and development, advanced manufacturing or any of the areas that the pharmaceutical sector works to develop.
In our submission to the Chancellor ahead of the Budget, we urged the Government to recognise the important role that investment in science and health research can play in maintaining a healthy economy and contributing towards economic growth. But investment in science research is not protected against inflation which means it is decreasing in real terms. Not only does the UK’s science spending fall far short of the EU target of 3% of gross domestic product (GDP), according to Science is Vital our investment is below 0.5% of GDP, leaving us bottom of the G8 in terms of Government support for science. The Government will have another chance to address this in its Comprehensive Spending Review in the autumn and we hope that it takes the opportunity.
The planned reduction in corporation tax is welcome, it will encourage companies to invest more in developing innovative medicines and it should help encourage companies to not only conduct their research and development in the UK but to manufacture medicines here too. Another boost for pharmaceutical manufacturing is the increased Annual Investment Allowance from £100k to £200k, supporting SMEs to make the expensive capital investments which will help them to improve productivity and returns to the Exchequer.
A further area of interest to the pharmaceutical sector is the innovation and skills sector. The Chancellor called universities Britain’s ‘jewel in the crown’ but did not mention postgraduate research. One area where he did announce expansion was in the number of apprenticeships, creating a fund which will be paid for by large employers. Increasing the number of opportunities to train and develop skills in the UK is good, and the ABPI looks forward to working with Government on the exact details of these proposals.
Finally, and fundamentally for the health sector, the Government confirmed its manifesto commitment to put an additional £8 billion into the NHS. This meets the requirement in the NHS’ Five Year Forward View and is welcome investment to maintain the level of service that the NHS needs to provide to meet the challenge of an ageing population.
However, this is the minimum that the NHS needs, answering a question during Prime Minister's questions, immediately before the budget, the Prime Minister said:
“We must keep investing in our rare disease research and in genomics, and making sure that the NHS takes up these treatments rapidly. That is the sort of health service we want to build.”
To build this health service, we must address persistent low levels of patient access to modern medicines. Demonstrating its commitment to this objective, the UK pharmaceutical sector is expected to contribute approximately £4 billion as part of a five year agreement with the Government to keep the medicines bill flat for two years and below 2% for a further three years. This presents the NHS with a unique opportunity to ensure patients are getting the right medicines at the right time, less constrained by cost.
Despite payments from the pharmaceutical sector under the Pharmaceutical Price Regulation Scheme (PPRS), UK access to new medicines is still low and slow compared to other countries. This means that NHS patients are missing out on treatments which are available in other parts of the world. To address this, the pharmaceutical industry is working with Government through the Accelerated Access Review to improve patient outcomes. A key part of this will be ensuring that medicines are seen as an investment and not simply a cost; this investment, used correctly, helps patients stay well and saves the NHS money in the long-term. The industry’s investment in the development of new medicines needs to be valued and rewarded by ensuring that those patients that would benefit have timely access to those medicines.
So, although there are things to be pleased about in this budget, there are even more areas where the Government is missing opportunities. For the sake of the economy and the nation’s health I hope that we, working with Government, are able to address these issues and maintain a sustainable and innovative pharmaceutical sector in the future.
Acting CEO and Executive Director - Commercial UK