Written evidence submitted by Johnson & Johnson Innovative Medicine (LSI0029)

Response to the Science and Technology Select Committee’s call for evidence on UK life sciences sector competitiveness

About Johnson & Johnson (J&J) Innovative Medicine

J&J Innovative Medicine is the pharmaceutical company of J&J, operating across Oncology, Haematology, Immunology, Neuroscience, Pulmonary Hypertension and Specialty Ophthalmology and we are the 2nd largest funder of clinical research within the UK’s healthcare system. Our response is on behalf of J&J Innovative Medicine alone[1].

J&J operates across innovative medicine and MedTech and has a substantial and long-term economic presence in the UK. In 1924, the UK became home to J&J’s first overseas operating company. Today, we are one of the UK’s largest foreign investors, with 3,000 employees, across seven sites; we are proud to have celebrated more than a century of innovation and growth in the UK. We have also proudly partnered with the NHS since its inception, working alongside healthcare leaders, clinicians and patients, to develop treatments and technologies to further UK health outcomes. In 2023 alone, J&J impacted the lives of 11.7 million patients in the UK. J&J is also a critical investment partner in key longitudinal research initiatives such as the UK Biobank and Our Future Health. J&J has deep connections with the UK - we want to see the Government succeed in its ambitions to be the leading European country attracting commercial R&D investment.

How far is the UK’s life sciences sector is internationally competitive?

The UK offers a world-class science base backed by globally respected research talent and infrastructure. However, this competitive edge cannot be taken for granted amid growing international competition for industry investment in both pre-clinical research and late-stage clinical trials. Currently, the UK’s strengths in R&D are overshadowed by a series of challenges in the commercial and reimbursement environments. The relationship between the commercial environment and investment in R&D is extremely important. The UK is seen as a major outlier globally given its highly challenging and unpredictable commercial environment. Global competitiveness in clinical trials, data and patient outcomes requires being a commercially relevant market with an appropriate standard of care. The UK, on this level, is falling behind.

Global boardrooms must make decisions on where to invest, based on key factors in every country - including investment by a government or health system in medicines, likelihood of reimbursement of a licensed medicine and uptake of new medicines. Recent data highlights that the UK is falling behind on these critical factors:

• As referenced by Lord Vallance, during in his oral evidence to the Committee, the UK spends around 9% of its healthcare budget on medicines against comparable countries that invest more than 15% (France & Germany).[i]
• In England, there is only a 65% rate of availability to EMA approved medicines, versus comparable European countries, such as Germany (90%), Italy (83%), and Spain (73%).[ii]
• England’s reimbursement rate for new cancer medicines approved by the EMA also falls significantly behind comparator nations at just 56%, compared with Germany (96%), Italy (83%), and France (67%).[iii] PhRMA data has also shown that far fewer patients in the UK, just 13%, access new cancer medicines according to their full licensed indications, compared with other comparable nations (U.S. 84.5%, Germany 61% and France 23%).[iv]
• Up to 66% of all medicines recommended by NICE are not made available for their full licensed use - meaning NICE restricts access to two thirds of the medicines it recommends. iv
• As per the Government’s own Life Sciences Competitiveness Indicators, the median uptake of medicines launched in the UK was lower than the average of competitors between 1 year after launch through to 5 years after launch.[v]

Due to these concerning trends, pharmaceutical R&D investment in the UK has lagged global growth trends for several years, with a significant slowdown since 2020. Life sciences foreign direct investment fell by 58% from £1.9 billion in 2021 to £795 million in 2023.[vi] Had the UK kept pace with these global trends, it would have received an additional £1.3 billion of R&D investment in 2023 alone.vi

Key challenges to overcome

• Investment in medicines
• One of the central factors driving the decline in our sector is the longstanding disinvestment in medicines through successive caps on the market. Between 2014 and 2023, the NHS budget increased by 33% in real terms whilst allowed growth in branded medicines declined by 11% in real terms.[vii]
• The UK will not realise the high ambition it has set for its life sciences sector until it addresses the core issue holding the UK back – an ongoing disinvestment in innovative medicines that is increasingly preventing NHS patients from accessing effective therapies that are available in other countries.
• The UK’s unprecedented and unpredictable ‘clawback rates’ under the current Voluntary Scheme for Pricing Access and Growth (VPAG) sends a profoundly negative message to international investors at a time when the UK is trying to position life sciences R&D as an engine for both population health and economic growth.
• The UK currently spends 0.28% of GDP on innovative ‘newer’ medicines with an aspiration to reach 0.6% within 10 years. Without material changes to the environment, grounded in clear milestones, this ambition will not be realised.
• Barriers to medicines access for NHS patients
• The way in which medicines are evaluated is having a detrimental effect on patient access to medicines. Medicines availability in the UK is in decline, with medicines not being launched or delayed and NICE’s decisions being increasingly restrictive[2].
• NICE’s baseline cost effectiveness thresholds have remained unchanged for over twenty years, resulting in the UK’s willingness to play for new medicines declining by 47% since 1999.[viii] 
• How medicines are valued is also having a negative effect on the UK’s life sciences ecosystem. Ensuring patient access to the best standards of care in the NHS is a key pillar of a well-functioning life sciences ecosystem and impacts on a company’s ability to make investments, place clinical trials in the NHS and launch future medicines.
• Efforts to improve regulatory processes are hindered by challenges in other areas
• The UK Government’s welcome efforts to improve the regulatory environment for medicines, are ultimately let down by the challenges in the commercial environment due to VPAG, low medicines spend, and challenging HTA processes.
• We believe there are still steps for the Government to take in the regulatory space. It must become more streamlined, predictable, and adaptive, especially as innovations increasingly blur traditional product categories. It is essential that the MHRA remains as integrated and responsive as possible to the life sciences ecosystem, working in partnership with industry and other sector partners.

Steps the UK Government should take to increase the competitiveness of the life sciences sector

• Increasing investment in medicines
• Despite good faith and substantial efforts on both sides, the industry and Government have not yet been able to reach an agreed way forward during the accelerated and extended VPAG mid-scheme review. The issues that the accelerated review were meant to address, remain.
• Currently, the VPAG medicines clawback in the UK sits at a of rate of 23.5%.[ix] This is far higher than similar markets that use ‘clawback-type’ mechanisms to control in-year medicine spending. For example, rebates in comparative markets like France and Germany are just 5.7% and 6.8%, respectively.vi
• To increase UK market competitiveness, reducing this disproportionate clawback rate is necessary. As it stands, the mechanism represents a significant effective innovation ‘tax’ on revenues for medicines launched in the UK. When combined with corporate taxes, the result is an effective tax in a key growth sector for the UK. A financial rebate mechanism of this magnitude does not exist in any other sector. Whilst it is indeed a ‘voluntary’ scheme, the alternative statutory scheme has similar repayment rates, is more challenging and can be changed at any time, and as such, the government has ensured that this ‘tax’ on life sciences is mandatory. This approach is not seen in other key industrial sectors.
• For rebate rates to come down, the UK’s proportional medicine spending needs to be brought to internationally competitive levels - a sentiment echoed by Lord Vallance in his evidence to the Committee and by the industry collectively. Ultimately, there is a need to move away from the current unsustainable and unpredictable model of a capped scheme.
• Removing barriers to medicines access for NHS patients
• Another core determinant of the UK’s market competitiveness is NICE’s existing medicines value thresholds. J&J supports the Association of the British Pharmaceutical Industry’s (ABPI) position that the baseline cost-effectiveness threshold should be increased to £40,000 - £50,000 to reflect inflationary and market pressures as these thresholds were established over two decades ago.
• J&J also supports calls for the reference case discount rate (the rate at which Government discounts the value of innovation occurring in the future) used in health technology evaluations to be reduced from the current 3.5% to 1.5%. This change would better reflect the unique impact and value of technologies that deliver long-term benefits and would bring NICE’s processes into closer alignment with the HM Treasury Green Book. There is a strong evidential basis for this change, and the case was accepted by NICE in its 2021 methods and processes review.

Critically, any changes to cost-effectiveness thresholds and discount rate practices must occur in parallel with a broader review of UK medicines’ expenditure. If thresholds were to increase without a corresponding rise in overall investment, the VPAG clawback rates would inevitably escalate - further worsening the punitive impact on UK medicines investment. Such an outcome would fail to address the root cause of the UK’s declining international competitiveness in life sciences and could, inadvertently, exacerbate existing challenges rather than resolve them.

Effectiveness of the Life Sciences Sector Plan

J&J is aligned on the ambition for the life sciences sector set out in the Life Sciences Sector Plan (LSSP), and we welcome several key initiatives outlined, including the investment into the Health Research Data Service, improvements to clinical trial set up and better alignment between regulatory and HTA bodies.

However, the LSSP conspicuously did not make a commitment to invest more in new medicines and address long-standing commercial environment barriers, such as high and unpredictable clawback rates on revenues. The LSSP also failed to capture some critical medicine access policy barriers that risk clinically and cost-effective medicines not reaching NHS patients. Without addressing these critical elements, we are concerned that the core ambition of making the UK the top life sciences economy in Europe by 2030 will not be met.

The biggest barriers to pharmaceutical, biotech, and MedTech companies increasing investment in the UK

From a pharmaceutical company perspective, the challenges already outlined around medicines spending, internationally uncompetitive and disproportionate clawbacks, and outdated value thresholds remain the most significant factors shaping investment decisions in the UK life sciences market. However, several additional issues also continue to limit the UK’s broader international competitiveness.

Clinical trials and research environment

• Clinical trial delivery - particularly the time required for trial setup and ‘recruitment to target’ - remains a persistent challenge in the UK. While we welcome recent improvements in set up times and the commitments within the Life Sciences Sector Plan to reduce these to under 150 days, this remains an area requiring proactive and sustained engagement from the Government.
• For companies such as J&J, clinical trials represent one of the most significant areas of our UK investment, delivering mutual benefits for patients, the health system, and sector growth. Commercial clinical trials remove treatment (investigational product and comparator treatments) and associated costs (e.g. scans or other monitoring tests) from the NHS and provide direct revenue back to NHS Trusts. However, ongoing delays for set up and/or recruitment risk trials being prioritised in competing markets where processes are more streamlined and supportive of timely, efficient research. Importantly, investment in clinical trials is closely linked to the ability to bring new medicines to patients after the completion of successful research. If the fundamental barriers to medicines investment - such as VPAG and restrictive cost-effectiveness thresholds - remain unresolved, there could be a knock-on impact for trial investment and the associated reduction in patient, NHS and wider economic benefits.

Commercial framework and pricing flexibility

• A further challenge arises from the NHS Commercial Framework for New Medicines, which currently limits pricing flexibility across different indications. The NHS typically operates a single, uniform price per medicine, which does not reflect that a product may deliver varying levels of value across multiple indications. While indication-specific commercial agreements can be pursued, in exceptional cases, the current pathway is narrow and highly restrictive, with limited practical applicability.
• This rigid approach can lead to situations where certain indications are deemed not cost-effective at the uniform price, resulting in lost opportunities for patient access and innovation adoption. To address this, NHS England, supported by DHSC, should ensure that the forthcoming update to the Commercial Framework enables a more accessible and standardised route for indication-specific pricing.
• Crucially, this reform should remove the current requirement for medicines to be priced “at or below” the existing cost-effectiveness threshold. The government and NHS England should not use the need for indication specific pricing as another means to drive down prices further. Doing so would mean that the patients don’t lose out on access to medicines for certain indications simply due to the sequence in which the indication for a medicine is launched.

1. How recent shifts in US policy – including potential tariffs and most-favoured-nation pricing – impact this sector in the UK.

Against the backdrop of global policy developments, it is essential that the UK avoids domestic policies that inadvertently amplify challenges or constrain patient access to innovation or limit investment in medicines. The clearest mitigation here is competitiveness: timely and predictable market access, proportionate clawback mechanisms, and value assessment processes that recognise innovation appropriately. Put simply, countries that sustain higher, more reliable investment in innovative medicines - as a proportion of health spend and GDP - are better placed to attract clinical trials, launches, and other business operations. The U.S.-UK Economic Prosperity Deal has rightly set out the need to “improve the overall environment for pharmaceutical companies operating in the UK” and the issues explored in the Committee’s inquiry, and this response are crucial to meeting the terms of the agreement and securing the UK’s position as a leading life sciences economy.

2. How UK consumer pricing and uptake measures impact the life sciences sector’s attractiveness for innovation.

How effective the NICE quality-adjusted life years (QALY) assessment is, and how it could be improved.

At J&J Innovative Medicine, we are supportive of a holistic approach to value assessment that is based first and foremost on the meaningful clinical benefits and health outcomes delivered to patients. The mechanistic use of single measures such as the quality-adjusted life year (QALY), which do not capture all elements of value, or a cost-per-QALY threshold should be avoided. HTA should focus on the available evidence, avoiding over-reliance on extrapolations and assumptions and should recognise that there may be unavoidable uncertainty in the evidence at launch, but that this should not delay patient access. However, while NICE tend to overly focus on longer term where outcomes are inevitably less certain, the QALY remains the current tool for assessing health outcomes and comparing the value of different diseases and health technologies within the UK medicines landscape. NICE should continue to use its modular update framework to ensure that the factors influencing QALY calculations evolve in line with changing patient, clinical, and societal priorities. NICE should also address their culture of risk aversion and focus more on the demonstrated and known benefits rather than the long-term outcomes where there is uncertainty.

As the existing modular update framework is exploring, particular consideration should be given to how QALYs account for more nuanced factors such as caregiver quality of life, as well as the wider societal and economic benefits that new therapies may deliver compared with existing standards of care. Ensuring that QALY assessments capture these broader dimensions will enhance the measure’s relevance, fairness, and ability to reflect the true value and impact of innovation on patients, caregivers, the economy and society as a whole.

How the UK compares to other European countries for pricing and uptake

J&J has repeatedly flagged to government and the system about the low and slow access to new medicines in England. These concerns were further reenforced by EFPIA data published earlier this year, which demonstrate that, compared with similar comparator countries, England lags behind both in availability and speed of access. While patients in comparable European nations receive 76% of new medicines, the figure for England stands at just 65% - a clear indicator of the access challenges facing the healthcare system. ii Even this masks challenges seen in the UK where some medicines are not available according to their full licensed indications iv.

Progress is further hampered by the slow pace of availability once marketing authorisation is granted. On average, patients in England wait around 310 days for access to new medicines - significantly longer than in Germany, who have a higher rate of availability - access is achieved in roughly 52 days.ii

Further evidence from PhRMA’s Analysis of Access Restrictions for New Medicines in the UK reinforces the scale of this challenge. The report found that only 13% of new medicines are recommended by NICE without restrictions and for all approved indications, compared with 23% in France, 61% in Germany, and 84.5% in the U.S. iv As a result, NICE recommends restricted access for two-thirds (66%) of the medicines it approves, meaning that UK patients are ultimately left with fewer therapeutic options than those in comparable markets. iv

PhRMA also highlights that far fewer UK patients access NICE-recommended new cancer medicines compared with other countries. When adjusted to UK population size, it is estimated that more than double the number of patients in France and Germany get access to new cancer medicines compared to the UK, and more than 13 times more patients in the U.S. vi

Much of the UK’s reputation for being ‘low and slow’ to adopt new medicines stems from persistent challenges with post-reimbursement uptake. A recent ABPI report found that the UK has the second-lowest level of medicines uptake three years after approval among G7 nations. Ongoing issues with system readiness - particularly in accommodating highly innovative therapies - and the complexity of local formulary decision-making, continue to act as repeat barriers to treatment. These factors significantly restrict real-world patient access to new therapies and undermine the UK’s attractiveness as a launch market for innovative medicines.

Without systemic support for uptake and medicines availability at scale, innovative therapies risk underutilisation, limiting commercial value, economic benefit, and ultimately patient outcomes.

3. What steps the NHS could take to improve implementation of innovations.

How MHRA and NICE processes account for personalised medicines, prevention, and medtech.

It is essential to ensure that medicines already deemed cost effective by NICE are not further levered as a way of reducing costs. New policies and processes currently being developed by NICE and the NHS should focus on pathway challenges and getting eligible patients timely diagnosis and treatment instead of focusing on re-evaluating medicines that are already available. Clinicians need to treat the patient in front of them with any one of the options available deemed cost effective by NICE.

While further improvements to the UK medicines and wider life sciences landscape are still needed, it is important to recognise that progress is being made across some areas of the system. Regulatory backlogs have reduced, supported by targeted investment to increase MHRA capacity, and initiatives such as the International Recognition Procedures have been positively received as more efficient routes toward UK regulatory approval.

However, regulatory and procedural improvements risk having limited real-world impact if the broader investment and access environment continues to constrain market competitiveness. Again, addressing these underlying structural challenges is the primary ‘must do’ for the Government.

[ENDS]

13 October 2025