NHS backlogs put Britain’s medicine supplies at risk
Hannah Boland
5 min read
NHS Pharma
For pharmacists across the UK, keeping shelves stocked has become a battle.
“Things like anti-allergy medicines, sleeping medicines, these are very common products that we’re struggling to get hold of,” says Leyla Hannbeck, chief executive of the Association of Independent Multiple Pharmacies.
“The only reason we seem to be managing around supplies of medicines such as antibiotics is because the demand is down. If it goes up again, then we’re struggling.”
The situation is strained now but tougher months lie ahead. Prescription medicines, in particular, could become tougher to source with drug manufacturers warning that shortages will get worse this year.
“We don’t want people to worry – we are preparing, absolutely we are preparing,” says Hannbeck. “But really ministers need to get everyone around the table, and soon.”
Pharmaceutical chiefs have been piling pressure on the Government to engage with them for weeks, warning that rising NHS levies on the drug industry threaten to crush the sector and imperil supplies.
The wrangling centres around a looming spike in a levy on businesses that supply the NHS. Pharmaceutical companies are facing a bill of £3.3bn as part of a NHS pricing agreement, up from the £563m in 2021.
Drug manufacturers say it is the “last straw” after soaring energy and ingredient costs over the past few years.
The dispute threatens to undo the progress made by Britain’s life sciences and pharmaceuticals industry during Covid – and put Chancellor Jeremy Hunt’s dreams of building Britain into a science superpower out of reach.
Under the NHS’s Voluntary Scheme for Branded Medicines Pricing and Access (VPAS), pharmaceutical companies agree to help subsidise the cost of the health service’s drugs bill if it rises by more than 2pc. The rate of how much companies are charged ultimately depends on how big the NHS’s medicines’ bill is and how fast it rises.
During the pandemic, costs ballooned. Industry leaders feel they are now being unfairly singled out to foot the bill. AstraZeneca chief Sir Pascal Soriot this week groused that pharmaceutical companies “didn't sign up to cover the cost of Covid.”
US drug makers AbbVie and Eli Lilly, have already quit the scheme in protest. The move is seen as a negotiating tactic ahead of talks with ministers about the future rate of the voluntary scheme.
Even companies that quit must pay: leaving the voluntary scheme puts companies under a statutory scheme that usually requires them to pay back a higher proportion of sales.
The repercussions of a sharp spike in these levies are prompting some less well known manufacturers to pull out of supplying Britain altogether.
This is particularly the case for companies manufacturing so-called “generic” drugs – medicines no longer protected by patents and so made and sold for far less. Generic medicines account for four out of every five prescription medicines used by the NHS and four in every 10 of them fall under the VPAS scheme.
“These companies run on very thin margins, so when the costs increase, including VPAS, it does make some products loss making,” says the British Generic Manufacturers Association’s chief executive Mark Samuels.
“At that point, companies will really look at whether that can supply the NHS, because no business can sustain supply of products at a loss for very long.”
A shrinking supplier pool would ultimately lead to higher prices for the NHS as supply is constrained. The London School of Economics estimates that companies pulling out and competition drying up could cost the health service £7.8bn.
A shrinking market also threatens a doom loop whereby constricted supply pushes up prices, in turn spiking the VPAS levy, which prompts more suppliers to quit, triggering a reinforcing cycle.
Generics drug makers are not the only ones pulling back from Britain because of the levy. New York-listed Bristol Myers Squibb has said that it could divert investment away from the UK.
“The reality is that from a commercial perspective, the environment is not actually supporting continued investment in the UK,” chief executive Giovanni Caforio told the Financial Times.
Across Europe, the industry is constructing four “biological plants”, 14 “active pharmaceutical ingredient” sites, four “Value Added Medicines” sites and 17 “finished dosage form” factories. None of these are in the UK.
It is not just in manufacturing where Britain is losing pace but also in research. Figures from the Association of the British Pharmaceutical Industry suggest that the number of clinical trials initiated in the UK slumped by around 41pc between 2017 and 2021.
GSK chief Dame Emma Walmsley said earlier this month the company was concerned about this decline, saying “getting it right” would attract more investment.
Industry leaders are due to meet with Health Minister Will Quince later this month and the Department of Health is understood to be open to looking at the operation of the NHS’s VPAS scheme.
A spokesman said the scheme has “driven significant improvements in patients accessing clinically and cost-effective medicines, whilst protecting NHS finances and promoting innovation”.
“The NHS has delivered a record number of access agreements since VPAS was agreed, including many world and European-first agreements. We will continue to engage with industry to understand the impact on companies.”
Ultimately, many in the drug business think Britain will simply have to pay more for its medicine.
The UK spends 81p on prescribed medicines for every £100 in GDP it generates, compared to £1.94 in Germany and £1.84 in Japan. Of its total health budget, around 9pc is spent on medicines, compared to 14pc for Australia, 15pc for France and 17pc for Germany.
“At the end of the day, this is about getting medicines to patients,” says one Big Pharma executive. “And if we can’t do that, what’s the point?”
