UK medicines investment: the case for improving the UK commercial environment

04 September 2025 Posted in Blog by Press Office

The King’s Fund recently published an explainer on medicines pricing. David Watson, Executive Director of Patient Access at the ABPI, builds on this explainer to make the case for policymakers to improve the UK's medicines system, protecting the UK’s position in life sciences and ensuring long-term patient access to new medicines.

The ABPI is proud to have supported The King’s Fund’s work on its refreshed long‑read Access to new medicines in the English NHS [1]. In a field often clouded by technical detail, the piece distils a complex system into a clear view of the UK landscape.

To some extent, the UK’s strengths in academic science and pre-clinical research are the same as they were more than 20 years ago, when I began my career in the industry. The UK’s relative weaknesses, however, have become more prominent in recent years, and we are now seeing far more instances of medicines being withdrawn from the NICE process or never entering it in the first place, owing to the UK’s strict cost-containment environment. This is troubling because ultimately, the people most acutely affected by delays in timely access are patients with unmet or inadequately met health needs.

With the 10 Year Health Plan for England and the and the Government’s updated Life Sciences Sector Plan now launched, this seems a good moment to revisit The King’s Fund analysis and weigh the UK’s outlook against the ambitions of these strategies.

As The King’s Fund notes, healthcare systems face stark trade-offs that can decide “who lives or dies.” Yet the constellation of arm’s-length bodies that governs access and spending - the MHRA, NICE, the Department of Health and Social Care, and NHS England - is immensely complicated.

The decisions of each body carry real-world consequences for patients. Decisions often lead to intense public scrutiny, for example, NICE’s decision not to recommend a treatment for metastatic breast cancer, despite it being available in Scotland, and Gilead’s recent inability to launch a new medicine in the UK due to NICE’s outdated cost-effectiveness threshold [2 ,3].

The Voluntary Scheme for branded Medicines Pricing, Access and Growth (VPAG)
Less visible, though, are the slow and steady cumulative impacts of the UK’s long-term policy of squeezing down NHS investment in medicines. This year has shone a spotlight on what the UK choses to spend on newer medicines. As The King’s Fund explains, “The VPAG keeps NHS spending on branded medicines predictable by capping total outlay; industry repays anything above that cap.”

The scheme has three stated aims:

support NHS financial sustainability
drive UK economic growth by providing a stable climate for life‑sciences investment
ensure patients gain rapid access to cutting‑edge treatments

These remain the right objectives—but 2025 shows the current design is failing all three.

In December 2024, with mere days to go before the end of the working year, the government announced that levies payable under the Voluntary Agreement on Pricing Access and Growth (VPAG) would be 50 per cent higher than previously forecast by the government, effective from 1 January 2025.

This has put pharmaceutical companies selling medicines to the NHS in the position of having to repay around £3.5bn to the government in one year – £1bn more than industry had expected to pay – and equivalent to a 22.9 per cent levy on the sales of companies’ most innovative products. The levy on older medicines is even higher, at up to 35 per cent.

Impact on UK investment in and access to medicines for patients and companies

In its explainer, The King’s Fund points out that the UK invests significantly less in medicines than its peers – around 9 per cent, compared with 15 per cent in France, 17 per cent in Germany and Italy, and 18 per cent in Spain [4].

The UK’s uptake of innovative medicines is already much lower than in comparator countries, around 52 per cent of the average in the first year and just 62 per cent after five years. [5] Research by EFPIA shows that England is also significantly below the leading countries when you look at medicines that are fully available to their licensed population – rather than available on a restricted basis [6]. For example, in the UK, only 37 per cent of new medicines are fully available, lower than Slovenia and Bulgaria; Italy and Germany have 75 per cent and 90 per cent respectively.

In response to the UK commercial environment, we have already seen a number of companies having to withdraw hundreds of millions of pounds worth of UK investments, retreat from NHS partnerships, and cut their headcounts.[7, 8, 9, 10] These measures are obviously hugely challenging for companies which have already invested billions of pounds in the UK – the sector is by far the largest commercial R&D spender in the country, £8.7bn in 2023. They will also very clearly compromise the objectives of the UK government in its Life Sciences Sector Plan, to be the top country in Europe in 2030 for commercial R&D, and in the top three countries for patient access to medicines [11].

Global boardrooms are increasingly frustrated and view the UK’s ambitious strategies as increasingly unmoored from the reality, with continuously rising payment rates while medicine prices stay rock-bottom and Quality-Adjusted Life Year (QALY) values erode.

Conclusion

The evidence continues to mount that both economic and patient impacts arising from the current situation are spiralling. An earlier report by WPI Economics for the ABPI found that the UK was likely to miss around £11bn of investment by 2033, and that companies were increasingly not able to sell their medicines into the NHS – taking them private in the UK where they were able to launch at all [12].

The ABPI will continue to conduct research into the impacts of these policies, but it’s already clear that they will continue to negatively affect patients, companies and the UK life sciences. Inaction is not an option, however challenging the search for a solution appears. If the situation is left unaddressed and the UK remains uncompetitive, more companies will have to delay or divert launches, leading to patients missing out entirely or waiting longer for the newest medicines than they would elsewhere. And the UK will fail realise its ambition and potential to be a global leader in health research if it continues to undervalue the products of that research.

We believe resolution is possible and urge the government to work with industry to take the necessary steps to make the UK the home of life science innovation.