Big Pharma has harsh words for UK's ballooning voluntary reimbursement agreement

21 Feb 2023
endpts.com
In the aftermath of AbbVie and Eli Lilly leaving the UK’s voluntary drug pricing agreement in January, some Big Pharma execs are still raising questions about an agreement that increasingly puts the cost of branded medicines on the companies — as the agreement is set to expire at the end of this year. The issue revolves around the country’s “Voluntary scheme for branded medicines pricing and access,” or VPAS — an agreement between industry and the UK government signed in 2019 in a bid to keep the prices of certain medications affordable. The UK’s government told the industry that pharma companies with branded medicines under the voluntary agreement will have to return almost £3.3 billion in sales revenue to the government in 2023 — 26.5% of revenue. That number is a major hike from just £0.6 billion in 2021, which tripled to £1.8 billion the following year. AbbVie and Eli Lilly quit the pricing agreement after that announcement. The UK pharma trade organization ABPI, or Association of the British Pharmaceutical Industry, wrote earlier this year that it has started looking at developing new proposals for what a new version of the agreement could look like — and intends to publish said proposals later this year. Vas Narasimhan described some of the pricing pressures on the continent to investors and analysts on the Big Pharma’s most recent earnings call, held on Feb. 1, as a “little bit of a mixed bag,” adding that the pharma giant has some concerns about what’s taking place in the UK and elsewhere. “Broadly speaking, I think, we as a sector need to do a better job clarifying the policymakers that, in order to invest in innovation in Europe, we need a pricing environment that rewards innovation, particularly when it improves outcomes for patients,” the chief executive added. For Lilly’s part, on a Feb. 2 earnings call with investors, the giant’s international president Ilya Yuffa said that “the U.K. voluntary system, we think is broken — and so we exited that.” Sanofi also chimed in briefly on its Feb. 3 earnings call, as executive VP Olivier Charmeil noted that in Europe’s current environment, Sanofi faces “price pressure.” AbbVie, more than three weeks after leaving the VPAS agreement, said on its earnings call Feb. 9 that the impact in or outside of the voluntary program was about the same — but called the departure a policy decision. “We really think that the UK Government needs to reform that VPAS,” CCO Jeff Stewart said bluntly, saying the UK did not plan properly for how things might evolve in the country. “And it’s a very substantial part of the revenue now that is causing problems, I think, across all of the companies,” Stewart added. Additionally, AstraZeneca’s Pascal Soriot weighed in on the UK’s “tax environment” — saying in a news conference Feb. 9, per Reuters , that it is starting to make the country look less attractive for biopharma investment.
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