Wes Streeting’s row with pharma firms grows as talks end on NHS drug pricing

A row between Wes Streeting and pharmaceutical companies has intensified after drugmakers rejected the health secretary’s latest offer on NHS drug pricing.

Talks broke up without agreement on Friday, meaning the mechanism under which the health service claws back some of the money it pays for medicines will continue at a rate the industry has called “unsustainable” and says could discourage companies from making investments in the UK.

At the heart of the dispute is the voluntary scheme for branded medicines pricing, access and growth (VPAG), under which the sector agrees the amount of revenues from drug sales to the NHS it has to pay back.

The two sides have been in acrimonious negotiations for months after the government unexpectedly raised the rate last December to almost 23% for 2025 for newer medicines.

It is understood that Streeting had made an ultimatum that if the industry did not accept his latest “generous” offer on pricing then the current arrangement would continue unamended and on Friday the Department of Health and Social Care (DHSC) announced talks had broken up with no agreement.

The industry body, the Association of the British Pharmaceutical Industry (ABPI), said the impasse could mean companies launch fewer medicines in the UK, which could ultimately disadvantage patients.

A government spokesperson said the clawback scheme “helps improve access to cutting-edge treatments for NHS patients while keeping the medicines bill sustainable for taxpayers”.

They said it was “regrettable” that the ABPI did not want to take the government’s proposals to a board vote, adding: “We have therefore determined that the interests of patients and the NHS are best served by concluding the review and continuing with the existing VPAG scheme unamended, while continuing to support the UK’s world leading life sciences sector.”

The ABPI, which includes large drugs companies such as AstraZeneca, Pfizer and Roche, hit back, demanding “urgent action” from the government to address the issues affecting the sector.

It added that VPAG – which means drug companies are forced to pay between a quarter and a third of UK drug sales back to the NHS – was “undermining UK patient access to innovative medicines and the competitiveness of the UK life sciences industry”. Labour has identified life sciences as a key growth sector for the economy.

Richard Torbett, the chief executive of the ABPI, said: “We need to reach a solution that improves patient access to future innovation, allows the sector to fulfil its growth potential, and does not require industry to pay back nearly three times as much of its revenues as is required in other European countries.”

He added: “Without change, the UK will continue to fall down international league tables for research, investment, and patient access to medicines.”

Pharma companies have previously said the current 22.9% rebate, which marks a significant increase on the payment of about 5% of revenue paid in 2021 under a previous agreement, made “future UK investment … unlikely”.

Pascal Soriot, the chief executive of AstraZeneca, said earlier this year that the new rate had discouraged investment in Britain, but claimed it did not have anything to do with the company’s decision in January to pull the plug on a £450m investment in its vaccines plant at Speke in Merseyside.

The row in the UK comes as pharma companies are under pressure from Donald Trump’s White House, which has threatened a crackdown on the firms unless they lower drug prices for Americans. In addition, the US president has repeatedly vowed to ramp up tariffs on imported drugs to sky-high levels, in an attempt to get companies to relocate production to the US.

Earlier in the week, the US manufacturer of the weight loss jab Mounjaro, Eli Lilly, said it was increasing the UK price by up to 170%, taking a month’s supply of the highest dose from £122 to £330.