The pharmaceutical industry has strongly criticized the UK government’s drug pricing levy, arguing that it is unsustainable and discourages future investments in the country.

On Thursday, the Association of the British Pharmaceutical Industry (ABPI)—which represents major companies such as AstraZeneca, Roche, and Pfizer—released a joint statement calling for urgent changes to the five-year pricing agreement reached with the government in late 2023. The industry body claims that pharmaceutical firms are struggling to afford the substantial rebates they are required to pay to NHS England under the current system.

At the heart of the dispute is the Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG). This initiative requires drug manufacturers to return between 25% and 33% of their UK sales revenue to the NHS— a sharp rise from approximately 5% in 2021 under the previous agreement. The ABPI warns that these escalating costs make the UK a less attractive market for investment and innovation.

The UK government has identified life sciences as a key sector for economic growth and aims to place it at the center of its industrial policy. However, the ABPI argues that the government’s ambitions will be undermined unless changes are made to the pricing rebate scheme.

Tensions between the pharmaceutical sector and the government over pricing and regulatory policies have been ongoing for years. Leading UK drugmakers GSK and AstraZeneca have consistently voiced concerns about the country's investment climate. In a significant move earlier this year, AstraZeneca canceled a planned £450 million ($585 million) investment in a vaccine manufacturing plant in northern England, citing reduced government support.

The industry is now urging policymakers to revisit the pricing framework to ensure that the UK remains competitive in attracting pharmaceutical investments and fostering innovation in drug development. Photo by Julphar.uae, Wikimedia commons.