For the global biopharmaceutical sector, regulatory hurdles are nothing new. But in the UK, the balance has tipped too far against industry: especially around financial regulation.
Successive governments identified the sector as a key driver of economic growth, yet place a severe and artificial cap on the rate at which the sector is able to grow.
Asking companies to repay up to a third of their total revenues – on top of all existing taxes, discounts and the costs of business, as the CEO of the Confederation of British Industry, Rain Newton-Smith, identifies below – is not how you treat a sector you want to see thrive; perhaps this is why no other part of the economy is subject to this kind of levy. It is little surprise that investment in UK life sciences has declined.
Of course, our sector should be regulated. Medicines must be safe, effective, and, with a finite NHS budget, should offer value for money. These principles are not in dispute. But there must be a workable balance.
The UK’s long-held ambition of “bench to bedside”, in developing medicines domestically and ensuring they reach NHS patients, has broken down: as mentioned by Kit Malthouse MP below. The revenue cap is part of the problem, but it is not the only one. There are simply too many other friction points, or overregulation, in the medicines pathway for “bench to bedside” to work as it should.
The government has begun to resolve parts of this, from clinical trial legislation to international recognition for marketing authorisation. Yet, what boardrooms need to see is joined-up improvement of the full pathway.
There is little value in securing a licence early only to spend years negotiating with the system to secure access. Then, after giving some of the biggest discounts in the developed world, to find the NHS does not actually use the product it is told is cost-effective.
With the Life Sciences Sector Plan, Innovation and Adoption Strategy and NHS 10-Year Health Plan, the government has an opportunity to put this right and signal that it understands the wider value that medicines and R&D bring to the UK.
Get this right, and investment could return just as quickly as it left. Get it wrong, and the growth potential of life sciences
will remain hypothetical.
Guy Oliver is managing director of Bristol Myers Squibb UK & Ireland
In an uncertain world, a strong economy is more important than ever, with every decision viewed through the lens of kickstarting growth.
Firms were encouraged to hear the Prime Minister outline a commitment to reduce the cost of the regulatory burden on business and tackle the conflicting priorities and duplication that stifle innovation. A more proportionate and risk-appropriate regulatory regime can help unlock investment and growth opportunities across the economy.
To its credit, the government has started the right conversation on regulation, and has begun to act. But government must consider regulation in the round, alert to the potential bureaucratic burden of new legislation and policy developments in all sectors. When viewed in tandem with the measures in the Employment Rights Bill, it is more important than ever that the government works to find a landing zone that commands the confidence of businesses.
To get growth going, we ultimately need to get the flywheel of the economy turning. Companies need to increase the rate of investment in growth, but that will be hugely challenging if their investment headroom is eaten away by rising operating costs. Government policy on key areas, like the Apprenticeship Levy and tech adoption, has the potential – with the right incentives – to support firms to make those investment decisions.
Inward investment and UK export strength are also both central to our economic health. The government must continue to reach hands across borders, progress our trade deal portfolio, roll out the red carpet for global investors and make it easier for them to back Britain.
The Spending Review is an opportunity to hardwire growth across Whitehall and shift department budgets to boost confidence and initiate investment: setting an ambitious and world-leading goal for UK R&D spending, for instance, would send a strong signal to attract domestic and foreign investment. The fact remains that the growth we all so urgently want to see can only come from the private sector. The government’s task is to create the conditions in which business has the confidence and headroom to invest.
Rain Newton-Smith is CEO of the Confederation of British Industry
In labs across the country, researchers are developing treatments that would have sounded like science fiction a decade ago: personalised gene therapies, genetic cures for rare diseases, even immune-system rewiring to fight cancer. These breakthroughs are already improving lives.
But while our scientists are charging ahead, our systems are dragging behind. We risk squandering the benefits of these innovations if we do not fix how the NHS adopts new medicines and technologies.
The UK is uniquely placed to lead the next wave of medical breakthroughs. We have a deep bench of research talent and a vibrant life sciences sector making huge strides in fields like genomics and synthetic biology. Yet our system’s ability to adopt innovation is not keeping up. That is a problem: not just for patients who wait too long for cutting-edge care, but for the NHS, which misses the chance to benefit from more efficient and effective treatment options.
As chair of the all-party parliamentary group for life sciences, I have been making the case across parliament for a smarter approach – one that backs British science, clears the bottlenecks in adoption, and ensures our healthcare system is set up to benefit from what our scientists are creating.
The government is right to prioritise life sciences as a growth sector and central pillar of its industrial strategy. The Life Sciences Vision laid solid foundations and now it is time to go further.
A key priority must be fixing the adoption gap. Right now, only 56 per cent of new medicines approved by the European Medicines Agency are available to patients in England, down from 66 per cent the previous year.
One issue is how the National Institute for Health and Care Excellence (NICE) assesses new treatments. The core of the problem is that NICE’s methodology is built around short-term cost-effectiveness rather than long-term value. It tends to undervalue medicines that deliver benefits over many years or have wider economic and societal impact. This creates a barrier for breakthrough treatments like gene therapies, which may have high up-front costs but dramatically reduce the need for ongoing care.
Take hepatitis C as a prime example of success. The introduction of direct-acting antivirals completely transformed the treatment landscape. These drugs can cure the disease in over 90 per cent of patients in a matter of weeks, eliminating the need for years of monitoring, liver transplants, or treatment for liver cancer. Though initially expensive, they have proved to be highly cost-effective by drastically cutting long-term NHS costs and improving patients’ lives. But it took years to convince the system to buy them.
Another sticking point is the commercial framework, particularly the NHS drug pricing deal. At the moment, it treats spending on medicines as a cost to be contained, not an investment in better outcomes. That thinking needs to change. The rebate rate on branded medicines has reached a record 22.9 per cent, up from 15.1 per cent the previous year, sparking real concern among global pharmaceutical leaders about the UK’s competitiveness. Innovative therapies often save money long-term by avoiding costly procedures or hospital care. We should be recognising that in our approach.
If we get this right, the prize is huge – better care for patients, a stronger NHS, and a thriving life sciences industry that creates jobs, attracts global investment, and cements us as a scientific superpower.
The UK has the talent, the infrastructure, and the ambition. What we need now is a system that keeps up with the science.
Kit Malthouse is chair of the all-party parliamentary group on life sciences
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