Bristol Myers Squibb warns UK drug tax threatens investment

Bristol Myers Squibb warns UK drug tax threatens investment

Bristol chief executive Myers Squibb has warned that the US pharmaceutical company could divert investment from the UK due to the expansion of a tax meant to cap the NHS drug bill.

Giovanni Caforio also said the low prices of medicines bought by the NHS from pharmaceutical companies was a major problem which threatened the UK’s ambition to become a leader in the life sciences industry.

Caforio told the Financial Times he was “very concerned” about the UK’s voluntary branded drug pricing and access scheme.

The scheme is an agreement between the Department of Health and the pharmaceutical industry which obliges pharmaceutical companies to pay 15% of their product revenues to the government if the overall NHS drug bill increases by more than 2% a year.

Caforio singled out the levy as a major impediment to investment, warning that it affected the company’s ability to think strategically about UK spending.

“We are all very keen to continue investing in the UK,” he said during a visit to BMS’s operations in Britain, which employ 1,200 people. “But the reality is that from a business point of view the environment is not really supportive of continued investment in the UK.

“And it’s particularly disappointing at a time when the UK government has clearly identified life sciences as an important priority for the country.”

The voluntary scheme for branded medicines and access, established in 2019, was originally intended to limit the amount spent by the NHS on new medicines, the makers of which have the power to raise prices because their products are protected from competition by patents.

But the program has expanded to include certain off-patent drugs, including biosimilars or copies of biologic drugs. Pharmaceutical companies said market competition meant they were already offering steeply discounted prices on biosimilars, leaving them struggling to absorb program costs.

Caforio said the UK has significant potential to grow its life sciences industry because of its academic and scientific strengths, which are “hugely significant”.

But he added that these were not accompanied by the market dynamics that allowed pharmaceutical companies like Bristol Myers Squibb to recoup their substantial research and development expenditures in developing lifesaving drugs.

“We have a significant concern in the UK. Current price levels are unsustainable and fail to recognize the value of innovation,” said Caforio,

Last week, Health Minister Will Quince hailed the UK’s potential as a life sciences superpower.

He told the FT’s Global Pharmaceuticals and Biotechnology Conference in London that his mission was to ensure “that when faced with a choice of where to invest – let’s say it’s a choice between the UK or Switzerland, or the UK or the US – it should be a no-brainer choice”.

John Stewart, NHS England’s national director for specialist commissioning, championed the voluntary scheme for branded medicines and access as key to the health service’s ability to buy innovative medicines and supply them to patients.

The Department of Health said the tax had “led to significant improvements in patient access to clinically cost-effective medicines, while protecting NHS finances and promoting innovation”.

The government was open to ideas on how the program should work, after the current agreement expires at the end of 2023, “and will continue to engage with industry to understand the impact on business”, said he added.

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