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11 December 2017updated 12 Dec 2017 1:32pm

The NHS is the pharmaceutical industry’s biggest customer – but it’s being ripped off

With our industrial strategy, Labour would build an “innovation nation”.

By Chi Onwurah Chi Onwurah

This week, Business Secretary Greg Clark announced the first of a number of “sector deals” – a plan to stimulate investment and innovation in the life sciences sector.

As Labour’s shadow minister for industrial strategy, I’m pleased to see the government is following our lead and taking a more proactive approach to supporting innovation. Many of the government’s proposals follow what we laid out earlier this year in our own industrial strategy – which (in business terms) was both pioneering and first to market.

And while we remain sceptical of this government’s ad-hoc, sector-based approach it is important to recognise the huge contribution of the life sciences sector to the British economy and public health in this country.

Over twice as many people survive cancer as 40 years ago. Conditions such as HIV/Aids and diabetes are now chronic and manageable – not the death sentence they once were. And the average person lives 11 years longer than they did in 1960.

Each year 5,000 pharmaceutical companies develop more than 7,000 new medicines in the UK through a combined research and development (R&D) spend of £4.2bn. Together they employ 140,000 people across the country and add £30.4bn a year to our GDP.

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But the role of the public sector in driving forward life science innovation must not be ignored. As Greg Clark himself notes in the foreword to the sector deal, the NHS is a “prized national asset” and a key factor behind the strength of the UK life sciences sector.

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The NHS can create huge benefits for patients in the UK. The Royal Marsden NHS Foundation Trust recently led the clinical trial of breast cancer drug palbociclib in collaboration with the Institute of Cancer Research. This meant that many woman gained early access to the drug as an experimental therapy and are continuing to enjoy the health benefits today.

The NHS is easily the pharmaceutical industry’s biggest customer, but there is lots of evidence that it isn’t getting a good deal at the moment.

This means that for every woman benefiting from experimental treatment on the NHS there are others unable to get the drugs they need – with one British woman forced last year to launch a crowdfunding campaign to afford her breast cancer treatment.

And the cumulative effect of this is crippling the finances of our health service. Total NHS spend on medicines increased from 11 per cent to 15 per cent of its annual budget between 2011 and 2016 – a rise that is larger than the current NHS deficit.

The other way that the public sector contributes to innovation in life sciences is through direct spend on R&D. Yet this often means that the public ends up paying twice for drugs – first to develop them, and then to purchase them at a premium.

A recent report from StopAids and Global Justice Now shows that UK taxpayers’ investment in medical research has led to the creation of medicines the NHS has not been able to afford. Last year alone the NHS spent £1bn on medicines which relied upon significant UK government funding for their development.

The current system provides neither accountability nor transparency. We don’t know how much the NHS is paying for many medicines. We don’t know how much is spent on R&D, or what contribution the public has made. Many aspects of clinical trial evidence are still too opaque.

These aren’t new problems – but now that the government intends to take a greater role in the development of new medicines, we need greater clarity regarding how the public will benefit.

We need to understand the true costs of R&D in order to have the evidence to determine a fair price for medicines. And when the UK taxpayer invests in the development of a new medicine we need to ensure that mechanisms exist to guarantee those medicines can be accessed by patients on the NHS and across the developing world.

When the public sector contributes, it gets a share of the rewards – this should be the principle at the heart of life sciences innovation.

Labour has already pledged to raise R&D spending to 3 per cent of GDP as part of our industrial strategy. We want everyone to reap the benefits of new research, and as part of this we are developing proposals to ensure that the NHS doesn’t get a raw deal.

We’re building an “innovation nation” for the many, not the few.