Two interesting subjects this month: firstly the VPAS scheme and the affect it’s having on industries other than big pharma, and secondly the results of a new survey which assesses the corporate reputations of the Pharma industry as a whole.
VPAS
To cut a long story short VPAS (the Voluntary Pricing and Access Scheme) is an agreement on pricing and rebates between the Government, the Association of the British Pharmaceutical Industry (ABPI) and the Pharma industry manufacturers and suppliers who signed up to the scheme.
It’s designed to limit the NHS’s medicine bill while supporting innovation and although it allows Pharma to increase sales to the NHS year-on-year that increase can only be within certain limits. Anything above that and the rebate kicks-in, with a vengeance in 2023 where its size has surged from about 5 per cent of revenue in 2021 to a whopping 26.5 per cent this year because of increased demand and backlogs since the pandemic.
Saving £7bn?
The UK Department of Health said recently that VPAS was set to have saved £7 billion over five years. But at what cost?
Eli Lilly has already said it is pausing a potential investment in London and is considering other locations in Europe because of concerns about a “stifling commercial environment” in the UK and adding that the UK “does not invite inward investment at this time”.
Lilly said negotiating a “new and sustainable pricing deal that unlocks the growth potential of our sector is key to restoring the UK’s international competitiveness and attracting future investment”.
And recently AstraZeneca, based in Cambridge UK blamed Britain’s tax policies for its decision to invest $360 million in a new manufacturing facility in Ireland rather than the UK.
In answer to this, and other criticisms, Chancellor of the Exchequer Jeremy Hunt announced hundreds of millions of pounds of investment for life sciences a sector which he has identified as one of the country’s five prime economic growth sectors.
According to The Times ‘It includes improving commercial clinical trials; increasing the capacity of the biological data bank; changes to planning rules to free up lab space; and updates to the East West Rail route, the new line to improve connections between Oxford and Cambridge, which with London form the sector’s Golden Triangle.’
The real pain
But the real pain from the VPAS scheme is being felt far from the corporate towers of big pharma. Inevitably they have simply cut costs to maintain annual profits (well, why wouldn’t you?) and those cuts more often than not are felt in the non-core services that pharma provides.
One area is medical education, a large proportion of which is provided by the industry on a voluntary basis. Not just the company specific events, where they will talk about their own products, but also the independently organised meetings where the industry plays a hands-off role, leaving the scientific faculty to create events which directly address the needs and interests of the attending HCPs. Couple that with the decreased spend on the major annual meetings and it’s clear that one obvious affect of VPAS is to ensure that our physicians, nurses, scientists and researchers are falling behind their contemporaries across Europe and the developed world.
