Lilly, AbbVie, BMS and more rally against UK's 'arbitrary' growth cap on branded drug market

Even as pharma giants try to get a handle on the Inflation Reduction Act in the U.S., drug pricing tensions continue to flare overseas.

With the U.K. working to tweak the country's Statutory Scheme for branded medicines, the Association of the British Pharmaceutical Industry (ABPI) is making its discontent known—and the trade group has managed to rally more than 20 major drugmakers to its cause.

The crux of the issue, which has raised the hackles of pharma majors ranging from AbbVie and Bristol Myers Squibb to Lilly UK, Novartis and Sanofi, is a proposed continuation of an “arbitrary” cap on growth in the British branded medicines market, according to ABPI.

The trade group claims this cap mechanism has spurred “rocketing revenue clawbacks in the U.K.,” up from around 5% to 27% over the span of just three years.

The increased clawbacks prompted protests earlier this month by companies including AbbVie, Amgen, Astellas, Bayer and many others. But those complaints haven't forced the government to back down.

The move comes as the U.K. National Health Service (NHS) struggles with an unprecedented financial crisis and risks overspending its budget by at least 7 billion pounds sterling next year thanks to inflation and strikes, The Guardian reported earlier this fall. 

From the British government's perspective, the overarching objectives of the statutory scheme are threefold. The plan is intended to limit the growth in costs of branded health service medicines to "safeguard" the financial position of the NHS; to ensure medicines are available on "reasonable" terms that account for the costs of R&D; and to deliver the above objectives in a way consistent with supporting both the life sciences sector and the broader economy. 

Meanwhile, AbbVie and Lilly earlier this year exited the U.K.’s Voluntary Scheme for Branded Medicines Pricing and Access, citing a recent spike in government repayment rates.

As for the U.K.’s latest proposal, the industry has also taken issue with a proposed new mechanism called the Life Cycle Adjustment, which aims to maintain total revenue raised through sales clawbacks. Under the proposed scheme, newer medicines would pay reduced rates, while drugs older than 12 years would have to pay “very high clawbacks” of up to 40%, ABPI said.

“If implemented unchanged, the industry believes these changes would damage the U.K. economy and wider medicines launch, access and supply,” the trade group said of the government's proposals.

All of this comes as the industry grapples with the Inflation Reduction Act in the U.S., which will allow Medicare to negotiate prices on 10 select drugs starting in 2026. 

The legislation has prompted a slew of lawsuits from drugmakers in the U.S., though the companies subject to the first round price negotiations have so far agreed to play ball.