Written evidence submitted by Medicines UK (LSI0047)

• Medicines UK represents 43 pharmaceutical companies, including 8 of the 10 largest medicine suppliers to the NHS.[1] These manufacturers supply the NHS with generic and biosimilar[2] medicines, accounting for approximately 85%[3] of all NHS-prescribed drugs.

• The life sciences sector does not simply rotate around the fortunes of global companies producing patent-protected medicines. Generic and biosimilar development, supply and production are a vital and sizeable part of the UK's life sciences ecosystem. As are medical devices and diagnostics. The Government’s Life Sciences Sector Plan reflects the needs of the different parts of this ecosystem and needs to be delivered.

About off-patent medicines

• Generic and biosimilar manufacturers supply over 2.5 million packs of medicine a day to UK patients[4]. Generic and biosimilar competition brings down medicine prices by around 70-90% from the pre-patent expiry price[5]. Without generics and biosimilars, the NHS drugs bill would be £20 billion more each year[6]. On average, in each of the next 5 years up to 2030, the medicines losing patent expiry currently cost the NHS £1.5 billion per year[7]. Billions of pounds of NHS savings are there to be realised or lost.

• One third of our members have production facilities in the UK, and we produce domestically around 25% of the medicines[8] that we consume in the NHS. In the last year, several of our members have announced or opened R&D labs (Sandoz in Cambridge), new manufacturing (Accord Healthcare in Fawdon, Newcastle) and European HQs in the UK (Celltrion and Accord Healthcare in Uxbridge, Greater London). This shows that there are UK life sciences success stories happening.

• VPAG has been well covered in the media, and it isn’t perfect for on- and off-patent medicines. But it was agreed by the originator sector and the previous Government less than 2 years ago. The VPAG rate is higher than expected for 2025 because the money that the NHS spent on new, patented medicines in 2024 was higher than expected[9].

Funding for new and existing treatments to deliver the 10 Year Plan

• We welcome commitments by Ministers Lord Vallance and Zubir Ahmed MP to increase medicines spending over time, in particular to support the shift to more preventative care. In the long-run, this will contribute to patients living longer, with more active lives. It will also lead to less financial pressure on the NHS in managing chronic conditions. This stepped increase must cover both new and existing treatments, since genuine population health prevention is as much about using existing medicines earlier and more widely to transform healthcare pathways at scale as it is about funding new patent-protected treatments.

• Dapagliflozin[10], a treatment mentioned in the evidence session on 16 September as having recently lost its patent, cost the NHS £333 million in 2024/25[11]. Now that generic supply can significantly lower costs and increase supply, NICE has consulted on widening its use as a first-line treatment for chronic heart failure[12] and diabetes[13]. For a lower cost, Dapagliflozin use will significantly grow, and from September 2026, it is likely that prescriptions will rise in number by 230% to treat 2.4 million people[14]. The same impact is likely to be true for the GLP1 weight loss drugs in the next 5 years.

• The main reason total medicine spending is lower in the UK is the NHS’s high use of off-patent drugs – representing around 85% of medicines used in the UK, compared with 30% in France (OECD, 2023). What that means is France is using higher-cost drugs despite the availability of cheaper, clinically equivalent medicines; this would not be possible in a taxpayer-funded health system like the NHS, without displacing other services.

• Focusing on medicines spending is not a proxy for better outcomes – if the NHS accelerates the use of biosimilars, as it has signalled it wants to as part of a new strategy in partnership with Medicines UK, it could save over £1bn and increase the number of patients receiving clinically effective treatment.

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

1. What steps, if any, the UK government should take to increase the competitiveness of the life sciences sector.

• The UK life sciences sector benefits from a sizeable NHS market for medicines and other healthcare products (even reflecting the devolved nature of the Health Service). The UK possesses significant scientific expertise and global companies see the UK as the gateway into Europe, albeit this has been impacted by the terms of trade we have been able to secure since leaving the EU. As we noted, we have seen a number of recent success stories, although more needs to be done to ensure we remain internationally competitive.

2. How effective the Life Sciences Sector Plan is

• The Life Sciences Sector Plan is a strong document and genuinely reflects the diversity and needs of the industry. It needs to be delivered, and priority must be attached across Government for all the measures and calls in the Plan.

• We identify the following issues, many of which are contained in the Plan, as areas where the UK Government should take steps to increase international competitiveness. We highlight those not covered by the Plan in any way.

3. The biggest barriers to pharmaceutical, biotech, and medtech companies increasing investment in the UK.

• In terms of which issues rank as most important, MHRA performance, VPAG and the wider low pricing of medicines to pharmacies, and the asymmetrical UK-EU relationship are arguably the most important. Note that issues like the EPR packaging tax are also seen as a drag to UK supply, since they will add seven figures to the bottom line of large volume NHS suppliers.

• First, our system of medicines regulation is world-class, but has been straining. The MHRA’s performance is now picking up, such as the time it takes to review and issue new medicine licences. This is vital and needs to be built upon because it enables or constrains market access for new treatments in the UK (on- and off-patent medicines).

• The lack of a mutual recognition scheme with the EU on medicines regulation, our biggest trade partner, is creating extra cost and placing domestic producers at a competitive disadvantage. We must better utilise the non-EU trade deals that we have signed to make a real difference. In this regard, India is a significant opportunity.

• The front line of the pharmaceutical industry – community pharmacy – is struggling to be financially viable. The next community pharmacy agreement must address this, particularly if they are to help deliver the 10 Year Plan and take more burden from GPs. If we want to genuinely support the UK life sciences industry, community pharmacies need sufficient funding to buy medicines at financially sustainable prices. That is also in the interest of NHS patients who do not want to experience supply issues. (Not in Plan).

• Incremental innovation can make a big difference to patients (e.g. switching from a tablet to a liquid form that the elderly and children can swallow). However, pricing disincentivises incremental innovation, limiting the investment case for companies. Future VPAG agreements should better support value-added medicines, especially as the VPAG older medicines spending budget is currently showing as a significant underspend nearly two years in. (Not in Plan).

• We spend billions each year on public funding that supports R&D in the life sciences. But while R&D eventually translates into GDP, other countries can often benefit from this GDP, not the UK. Manufacturing resulting from UK innovation frequently occurs elsewhere, as growing companies move to jurisdictions with better funding options. We fail to set terms that reward and repay the initial UK public investment. (Not in Plan).

• Strengthening scale-up support for UK SMEs is essential to stop public support for R&D from subsidising other countries’ GDP, as companies move to other countries with more readily available scale-up capital funding.

• We introduce policies that undermine the domestic competitiveness of UK life sciences (e.g., an EPR packaging tax that will raise NHS drugs costs, since medicine regulations limit packaging changes). (Not in Plan).

• Most medicines that NHS patients consume or take cost under £3 per pack[15]. Up to half of this is the margin to cover wholesale distribution costs and the pharmacy for dispensing the medicine. The most used antibiotics are 10% lower in price now than in 2020[16]. This is positive for the taxpayer, and we have a system that is comparatively flexible in responding to the minority of medicine shortages that exist. But this leaves no room to invest in and strengthen UK health security and resilience. A policy solution is needed.

• The VPAG investment fund is a £400m fund that originator, generic and biosimilar manufacturers pay as part of the overall VPAG levy[17]. It mainly funds clinical trials (£300m). None of our members has received any benefit. There should be more flexibility in funding strategically beneficial projects that cover the whole pharmaceutical industry. For example, a small amount could be spent to digitise all patient information leaflets[18] thereby removing significant cost, increasing efficiency and supporting sustainability goals. (VPAG not in Plan).

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

• Moves by the US administration have placed some uncertainty into global pharmaceutical investment. At the same time, the EU is making a powerful play to attract investment (draft EU Critical Medicines Act).

• The US administration appears to be influencing negotiations on the cost of medicines paid by the NHS, although at the time of writing, this remains to be seen.

• There has been little confirmed information about the US administration’s reported 100% pharmaceutical tariffs. Is it understood that they would only apply, if they do end up applying to UK manufacturers, to patented and branded drugs. Some off-patent drugs are branded due to regulatory requirements or to differentiate the product from others in the market. The application of the tariff needs clarification.

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

• The UK has the lowest average generic manufacturer selling prices in Europe[19]. This is aided by a large market, often rapid uptake and a sophisticated pricing and reimbursement system whereby prices can rise in response to market-wide shortages to pull in supply.

• This lever in the reimbursement system is crucial to the UK, but even despite this, the UK can at times struggle to access enough capacity where other countries purchase medicines for a far higher price.

4. What steps the NHS could take to improve implementation of innovations? How do MHRA and NICE processes account for personalised medicines, prevention, and medtech.

• Innovation needs to be seen more broadly. We have noted how the VPAG pricing system can stifle value-added medicines or incremental innovation.

• Some of our members wish to partner with the NHS to deliver innovative ways of providing care to the population at scale. The Regional Health Innovation Zones being established through the Life Sciences Sector Plan need to enable this.

13 October 2025