Eli Lilly (LLY.US) and AbbVie (ABBV.US) Exit UK Voluntary Drug Pricing Scheme Amid Soaring Rebate Rates
Eli Lilly
Global Pharmaceutical R&D and Production Company
AbbVie
Innovative Drug Developer
ABPI
ABPI is the trade association for more than 70 companies in the UK that produce prescription medicines. Its member companies research, develop, manufacture, and supply over 80% of the National Health Service (NHS) prescription medicines. ABPI also represents companies engaged in the research and development of human medicines.
Intelligent Finance APP learned that British pharmaceutical companies Eli Lilly (LLY.US) and AbbVie (ABBV.US) have withdrawn from the voluntary drug pricing agreement with the UK, which is a blow to the UK's efforts to control drug costs. The Association of the British Pharmaceutical Industry (ABPI) stated on Monday that there is growing opposition within the industry to the government’s price control measures. The current voluntary pricing agreement, which is set to expire in December, limits the nominal growth rate of branded drug spending by the UK’s National Health Service (NHS) to 2% annually, with the industry required to refund any expenditure exceeding this limit.
This year, companies participating in the agreement will need to repay 26.5% of their drug revenue to the government. The ABPI stated that the growth in healthcare demand and the use of new drugs has exceeded pre-pandemic industry forecasts, pushing the repayment rate to levels beyond what is sustainable.
Laura Steele, President and General Manager of Eli Lilly Nordics, stated, "The current plan undermines innovation and leads to uncontrollable costs." "We hope to see action on a new agreement that allows the life sciences to thrive in the UK."
The exit of two pharmaceutical companies is another blow to the NHS, which is struggling to cope with surging demand and a large backlog.
The prices of Eli Lilly and AbbVie will now be subject to different regulatory frameworks, with previously higher reimbursement rates.
Manufacturers of branded drugs in the voluntary scheme will be required to return nearly £3.3 billion ($4 billion) in sales revenue to the UK government this year, compared with about £600 million and £1.8 billion in 2021 and 2022, respectively.
AbbVie UK General Manager Todd Manning stated, "We do not make the decision to leave lightly." "Without a positive signal indicating that future plans will offer more reasonable rates, I am concerned it will become increasingly difficult to justify staying in the UK."
ABPI said they are seeking negotiations with the government to develop "entirely new future solutions."