Lilly UK – Written evidence (LSI0106)
Introduction
Lilly is a US-headquartered pharmaceutical company with a major commitment to the UK. We are proud of our heritage in this country: Lilly UK was our first business to open outside the US in 1934, and today we are one of a small number of companies in the UK that not only discover, but also make and deliver medicines to patients. Lilly is committed to bringing life-changing medicines to those who need them by launching at least 20 new medicines in the 10 years from 2014 through 2023.
Lilly has three sites in the UK: Research & Development (Erl Wood, Surrey), Manufacturing (Speke), Sales & Marketing (Basingstoke). We employ 2,500 staff, providing a large spectrum of jobs, from research, to production line work, to marketing, and more. Lilly’s UK research facility at Erl Wood is our biggest neuroscience research site in the world. Over the last decade we have spent over £1.1 billion on our UK research operations, invested more than £85m in our UK R&D facility and are currently conducting more than 60 clinical trials in the UK in areas including oncology, diabetes, immunotherapy, pain and neurodegeneration – with a specific focus on Alzheimer’s disease. We have been manufacturing animal and human pharmaceutical products at our site in Speke, Liverpool since 1963 and invested £29m in constructing a new biotech manufacturing facility in 2014, supported by a £3m grant from the Government’s Regional Growth Fund. In every aspect of our work, we pride ourselves in acting in a responsible, ethical and transparent manner.
We welcome the opportunity to respond to the Science and Technology Committee inquiry as the Government develops its new Industrial Strategy and a specific Life Science Sector Strategy.
Overall, Lilly supports the submissions from the ABPI and the American Pharmaceutical Group (APG) and has not replicated their arguments in this response, but chosen to highlight those issues that are most pertinent to Lilly’s business and investments in the UK. This is a moment of great opportunity to make the UK an even more attractive environment for life sciences investment. Lilly believes that:
Lilly Response
Science and Innovation
Lilly supports the comments and recommendations of both the ABPI and the APG. In addition:
1.1 Lilly has spent £1.1bn on UK R&D, and invested an additional £85m, into our UK R&D facility in the past decade and has more than 90 research collaborations. Globally, we reinvest 24% of revenue back into research, and our second largest R&D site in the world is in the UK. Future investment will depend on the UK’s ability to support the entire life sciences ecosystem, from early stage drug discovery work through regulatory co-operation, intellectual property protection, health technology assessments, access, and effective sharing of monitoring and safety data across the UK and the EU. “Brexit” must not be allowed to reduce the UK’s attractiveness and a smooth transition supported by ongoing regulatory co-operation will be critical to ensuring the UK can attract future investment.
1.2 The UK is hindered by long-term challenges around market access, including an inflexible medicine reimbursement system, slow uptake of new medicines, fragmented decision making, lack of investment in the NHS and short-term cost containment strategies. Alongside this, it can be difficult to obtain access to public health data that could allow improvement to be measured, productivity to be increased, and provide researchers with the best possible environment to both develop new medicines and demonstrate their effectiveness, despite the NHS having one of the largest health datasets in the world. Lilly welcomes the focus on health data in the Life Sciences Industrial Strategy. The UK should become a leader in the use of public health data, opening up access while ensuring appropriate safeguards are in place; this requires careful planning and implementation.
1.3 Fiscal incentives should encourage further investment in scientific research – R&D tax credits have contributed over the past decade towards promoting the UK as an attractive location for R&D intensive industries, such as the pharmaceutical sector. As other countries develop and improve their fiscal incentives, it is vital the UK remains competitive, but the country ranks only 19th globally for R&D tax support today and incentives are already beginning to lag behind comparable EU countries. In addition to protecting R&D tax credits, the government should consider emulating Belgium, where government action (through offering companies with R&D employees the possibility to reduce taxes paid on their remuneration by 80%, and the chance to recover 75% of all taxes paid to the tax authorities since 2009) is reducing the cost of conducting research in the country.
Lilly supports the comments and recommendations of both the ABPI and the APG.
2.1 Regarding intellectual property (IP) protections, at minimum, the UK must enshrine current EU IP incentives into UK law as part of the European Union (Withdrawal) Bill. Important EU regulations currently provide incentives for firms to develop IP in the UK, but it is unclear whether these would continue to apply after Brexit. The Government should consider how it could adopt current regulations on Regulatory Data Protection, Supplementary Protection Certificates, paediatric rewards and orphan drugs exclusivity into UK law, providing a strong signal of the UK’s commitment to the life sciences sector.
Lilly supports the comments and recommendations of both the ABPI and the APG.
3.1 Discovering, developing and manufacturing medicines is a global endeavour, with biopharmaceutical companies relying upon access to the best talent from around the world. People of more than 50 different nationalities work at Lilly’s Surrey R&D base and over 12% of the staff are EU nationals. With Brexit calling the long-term status of EU nationals working in the UK into question, and UK nationals in the EU, both sides must provide assurances that these people will be able to continue to work in their respective countries after the UK leaves the EU and that the UK will be able to continue to attract the brightest and best talent. We support the LSIS recommendations to build and promote a renewed migration system that allows the UK to recruit the best talent from across the globe.
Lilly supports the comments and recommendations of both the ABPI and the APG.
4.1 Notably, the UK ranks 9th out of 13 developed countries for the use of the newest medicines and UK use of new cancer medicines is 33% lower than the EU average. The UK also spends less on medicines than EU counterparts – 0.9% of GDP vs 1.2% in the EU. The ABPI response also shows how the UK is lagging behind France and Germany in terms of private equity investment in Life Sciences, and a decrease in the number of companies receiving investment.
4.2 If the stated ambition within the LSIS for the UK to be in the top quartile of comparator countries for speed of adoption and overall uptake by the end of 2023 is to be realised, the comparator countries must be defined and there must be must be a clear and measurable roadmap for reform of the Health Technology Assessment (NICE) system, as well as swift implementation, to support this goal.
Industrial Strategy
Lilly supports the comments and recommendations of both the ABPI and the APG.
5.1 We agree that a key learning from previous strategies (Life Sciences Strategy 2011, Innovation, Health and Wealth and the Accelerated Access Review) is around implementation. There must be clear accountability and defined goals for delivery of the Strategy, with implementation embedded as a clear objective of the business plans for both the Department of Health and Department of Business, Energy and Industrial Strategy.
5.2 Lilly believes that the role of Minister for Life Sciences should be reinstated, and should take responsibility for implementation of the Strategy, under the scrutiny of a designated Cabinet-level Minister who would retain overall accountability for the strategy.
Lilly supports the comments and recommendations of both the ABPI and the APG.
6.1 We welcome the LSIS recognition that, to be successful, the whole life sciences ecosystem must be considered. We fully support the ambition for the UK to be in the top quartile of comparator countries for access and uptake of new medicines. In order to achieve this ambition, the Government must review as a priority current barriers to greater uptake of new treatments across the NHS, in partnership with the devolved nations. NICE’s appraisal process has not been significantly reformed since it was established since 1999 and is widely recognised as not having kept pace with advances in medical science, particularly in oncology. The Government must signpost NICE to reform its processes and deliver a reformed HTA process based around a broader consideration of value. Reliance of a cost-per-QALY evaluation should be limited with clinical and patient voice at the heart of all decisions made by NICE.
6.2 Government’s final response to the strategy recognises the need for a holistic, ecosystem-wide approach to life sciences policy, recognising the full value of innovative medicines, from new investment in early stage research through to adoption. The Government’s response must recognise that access to innovation and investment in the life sciences ecosystem are intrinsically linked.
6.3 A heads of agreement for a future voluntary industry-government pricing scheme must be agreed as part of the Sector Deal, to reassure global investors about the direction of the future negotiations.
6.4 The Government’s final response to the LSIS must recognise the need for a reformed NICE health technology assessment (HTA) process and simplified access routes for new medicines as key to improving access for UK patients.
Lilly supports the comments and recommendations of both the ABPI and the APG.
Lilly supports the comments and recommendations of both the ABPI and the APG.
8.1 The Government should ensure that sufficient funding is set aside to meet the ambitions within the strategy for the long-term, as part of the forthcoming Sector Deal. This will provide reassurance to the global life sciences industry about the long-term policy direction of the UK.
Lilly supports the comments and recommendations of the ABPI.
NHS procurement and collaboration
Lilly supports the comments and recommendations of the ABPI.
10.1 Lilly believes that a stable and predictable voluntary medicines pricing regime should be retained and that the PPRS should be the vehicle to implement the recommendations of the Life Science Strategy, with the following five principles:
The Government’s support for these proposals would demonstrate commitment to supporting the life sciences industry, providing the sector with reassurance from policymakers at a time of high uncertainty. It has been estimated that bringing the UK in line with comparable nations on medicines uptake would generate 4,000 new jobs by 2021, and an additional £705 million in Gross Value Added (GVA) per year. The proposals would also ensure that the NHS has stability and certainty in its spending during a time of intense pressure on NHS budgets, while developing systems that are conducive to future developments in medical sciences and emerging medicines. A commitment to these proposals would also improve NHS outcomes through earlier access to treatment, driving the NHS to remain at the centre of a thriving life sciences sector. The proposals would allow UK patients to benefit from the latest medicines by speeding access to new treatments. A commitment to adoption and promotion of new medicines will ensure industry continue to bring their best treatments to NHS patients.
10.2 We remain concerned by the NHS’s priority for short-term cost containment as part of medicines spending, without consideration of the broader value of access to new treatments. We believe there is a lack of alignment between reimbursement decisions to the strategic objectives of the NHS, compounded by the lack of mechanism to measure the impact of new medicines on patient outcomes. As currently constituted, the reimbursement system does not deliver consistent or sustainable access to the most innovative treatments, particularly in oncology and specialised medicines, and is increasingly out of step with more flexible systems in comparable countries, such as France.
Lilly supports the comments and recommendations of both the ABPI and the APG.
11.1 The AAR recommendations will only benefit patient access if there is a clear roadmap for implementation; and the restriction to just 10 technologies per year should be reviewed to truly improve the UK’s ability to improve access and uptake.
11.2 The NHS should do more to make it easier to agree more flexible, confidential pricing deals with industry. Particular consideration should be given to multiyear procurement options and ensuring the NHSE commercial team is appropriately resourced to utilise a full-range of pricing options including outcomes-based pricing, indication-based pricing, annuity-based pricing and volume agreements.
11.3 The recent introduction of the Budget Impact Test must be reversed as a priority, given the extremely damaging signal that this sends to both patients and global investors as to the NHS’ willingness to promote access to vital new treatments readily available in other countries. In addition, more must be done to support uptake at CCG level and in the devolved nations. A recent publication by the Belfast Health Trust recommends the routine delay of access to new medicines for Multiple Sclerosis, Inflammatory Bowel Disease and dermatology conditions until 2018/19 as a cost-saving measure, however, these medicines have already been judged to be cost-effective by NICE.
12 How can collaboration between researchers and the NHS be improved, particularly in light of increased fiscal pressure in the NHS? Will the NHS England research plan help in this regard? How can the ability of the NHS to contribute to the development of and adopting new technologies be improved?
Lilly supports the comments and recommendations of both the ABPI and the APG.
12.1 One of the key areas for collaboration is in clinical trial research. Ongoing co-operation with the EU will be critical to ensuring the UK does not lose access to clinical trials, which run simultaneously in multiple countries around the world. The EU has developed a highly integrated system for registering and approving clinical trials, including developing a single portal for all clinical trials applications from 2018 and the UK must meet the EU’s stringent data privacy standards to enable the transfer of clinical trial data between the UK and EU27.
12.2 It is imperative that the UK can continue to access this integrated system to compete for investment and maintain clinical research as a treatment option, ensuring UK patients have access to the newest medicines and delivering £192m in free medicines to the NHS in a single year.
12.3 In addition, the speed at which trials can get up and running in the UK can be hindered due to resource constraints within the NHS – sometimes the enthusiasm of clinicians to get started with trials can be held back by administrative bottlenecks and a lack of capacity in the system to set up and practically run trials. NHS resources should be better directed to trial support. Access to the latest medicines is also critical; comparator trials are impossible if the comparator medicine is not available within the NHS.
12.4 Lilly has over 60 trials running in the UK today, with patients who are living with breast, lung or stomach cancer, Alzheimer’s disease, psoriasis, rheumatoid arthritis, diabetes, migraine and post-operative pain, to name a few. Our UK early-stage research specialises in Alzheimer’s disease and neurodegeneration.
Responsibility and Accountability
13 Who should take responsibility of implementation of the LSIS and to whom should they be accountable? What should the UK Government’s role be? What should the role of the academic, charitable and business sectors be?
13.1 Responsibility for the implementation of the LSIS and the Sector Deal must be held at the Cabinet-level, with clear delivery metrics and timelines, to support accountability of the Government’s response to the LSIS. We believe a dedicated Minister for Life Sciences should take overall responsibility for the implementation and successful delivery of the LSIS recommendations, which must also be included in the departmental business plans for both the Department for Business, Energy and Industrial Strategy and the Department of Health.
14 What is the role of companies within the sector, particularly the large pharmaceutical companies, in the implementation of the strategy? How are they accountable for its success?
Lilly supports the comments and recommendations of both the ABPI and the APG.
14.1 Pharmaceutical companies bring significant investment, talent, jobs, facilities, clinical trial research, and scale to UK R&D and significant opportunities for public-private partnerships. Lilly alone has more than 90 research collaborations in the UK, and the company’s first ever venture capital investment was made in Scotland.
15 Does the Government have the right structures in place to support the life sciences sector? Is the Office of Life Sciences effective? Should the Government appoint a dedicated Life Sciences Minister? If so, should that Minister have UK-wide or England-only responsibilities?
15.1 Lilly believes that a dedicated Life Sciences Minister is needed to support the sector and that ownership for the growth of the industry must be held at the Cabinet-level, rather than by junior ministers.
Brexit
We have chosen to answer the three questions on Brexit together, as these three questions are inter-related.
Lilly supports the comments and recommendations of both the ABPI and the APG. To ensure certainty for patients and to sustain a thriving UK Life Sciences ecosystem, Lilly believes policymakers should:
16 Act now to show the UK is open for business and forge a new industrial strategy. While the long-term relationship between the UK and the EU will not be known until negotiations are complete, important steps can and should be taken now to provide immediate certainty and show that the UK remains a great place to invest, with life sciences at the centre of a new UK industrial strategy.
16.1 Commit to transitional arrangements that ensure continuity of medicines supply to patients and avoid a 'cliff-edge' where the UK leaves the EU before a future EU-UK deal is ratified. Transitional arrangements that retain UK involvement in the single market and take effect if the future EU-UK trading relationship is not finalised by March 2019 would prevent a damaging “cliff edge” situation. Transitional arrangements must protect research, manufacturing and regulatory arrangements and – above all – prevent any interruption to the supply of medicines to patients across the EU and the UK. The UK should also begin to re-establish itself in the World Trade Organization, including adopting the pharmaceutical schedules completed since the UK was last an independent member.
16.2 Provide swift assurances to UK nationals working in the EU today, and EU nationals working in the UK, and enable highly skilled specialist workers to continue to move between the UK and EU. Discovering, developing and manufacturing medicines is a global endeavour, with biopharmaceutical companies relying upon access to the best talent from around the world. With Brexit calling the long-term status of EU nationals working in the UK into question, and UK nationals in the EU, both sides must provide assurances that these people will be able to continue to work in their respective countries after the UK leaves the EU. People of more than 50 different nationalities work at Lilly’s Surrey R&D base and over 12% of the staff are EU nationals.
16.3 Give certainty to firms that develop IP in the UK by enshrining current EU IP incentives into UK law. Important EU regulations currently provide incentives for firms to develop IP in the UK, but it is unclear whether these would continue to apply after Brexit. The Government should consider how it can enshrine current regulations on Regulatory Data Protection, Supplementary Protection Certificates, paediatric rewards and orphan drugs exclusivity into UK law, providing a strong signal of the UK’s commitment to the life sciences sector.
16.4 Deliver on an industrial strategy that reflects the vital contribution of life sciences to UK public health and economic prosperity. The UK industrial strategy could provide fresh economic impetus to major sectors, including Life Sciences. This should start with immediate positive signals from Government that the UK will continue to be an attractive investment location, including action on plans to bring down the Corporation Tax to 15%, and enhancing available tax credits for businesses investing in R&D in the UK. The pharmaceutical industry invested £4.2bn in UK R&D in 2015, accounting for one-fifth of all UK business R&D spend.
17 The UK must also secure continued close EU-UK co-operation on medicines regulation, trade and R&D in the upcoming negotiations. In the long term, the best outcomes from the Brexit negotiations for public health and jobs will be secured through agreeing continued close EU-UK cooperation on medicines.
17.1 Retain the UK’s place in the EU-wide medicines regulatory system systems for human and veterinary medicines and agree an approach to the EMA relocation that does not put patient safety at risk. The close and consistent medicines regulatory regimes that exist for the UK and EU have benefited patients and industry for decades. A common system for medicines licensing, clinical trials, data privacy and pharmacovigilance is in the interests of public health and jobs, and should be maintained through a regulatory co-operation agreement that keeps the UK in scope of the European Medicines Agency (EMA). The UK has the largest pipeline of biotech products in development in Europe, partly due to its strong regulatory framework and the Medicine and Healthcare Products Regulatory Agency’s role at the heart of the EMA, delivering around 25% of its inspections. Relocation of the EMA headquarters must not impact the EMA’s ability to carry out its key functions and a smooth and timely transition must ensure the process of regulating medicines will not be interrupted and, critically, that patient safety is not put at risk.
17.2 Allow tariff-free trade, and low administrative costs of trade between the UK and the EU, and for the UK to join the EU US Mutual Recognition Agreement (MRA) on Good Manufacturing Practice (GMP) inspections. The UK has a deep trading relationship with the EU when it comes to Life Sciences; the UK imported £29.7 billion in life sciences goods and exported £29.5 billion (44% of which went to the EU) in 2015. To support a thriving UK industrial ecosystem, an effective, unencumbered medicines supply chain is vital. This rests on continued recognition of quality control and trademarking, and an ambitious and comprehensive UK-EU Free Trade Agreement, with tariff-free trading and minimal customs and administrative charges on trade pharmaceutical products and ingredients.
17.3 Maintain a world-class UK science base that includes continued access to EU/UK funding streams and research programmes that encourage public-private partnerships and investments. Life Sciences in the UK are underpinned by a strong EU ecosystem of academic public-private partnerships, which in turn are currently supported by EU research programmes. Between 2007 and 2013, the UK secured a total of €8.8 billion in European research funding, which is €3.4 billion more than it contributed. The Life Sciences sector benefits from the Innovative Medicines Initiative (IMI) and Horizon 2020 schemes, including indirectly through positive effects on UK academia; Lilly is the 10th largest industry contributor to the Innovative Medicines Initiative. To ensure continued positive effects of R&D collaborations, the UK should continue to participate in EU-wide science funding schemes by remaining part of European Research Area (ERA).
22 September 2017