Pharmaceutical Firms Say UK Investment Is 'Unlikely' Unless Payment Levy Is Adressed

The Association of the British Pharmaceutical Industry (ABPI) is urging ministers to address excessive levies on manufacturers to ensure the sector remains competitive globally.

The life sciences industry, a key pillar of the UK’s economic strategy, could struggle to attract investment unless payment rates are adjusted.

Last week, the government proposed raising the Statutory Scheme payment rate for newer branded medicines from 15.5% to 32.2% of subject companies’ National Health Service (NHS) sales in the second half of 2025.

The payment rate is the revenue companies must hand back to the government on their sales of branded medicines to the NHS. It is an additional charge to the taxes paid by companies.

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UK pharmaceutical leaders from Amgen Inc AMGN, AstraZeneca Plc AZN, Biogen Inc BIIB, Boehringer Ingelheim, Bristol Myers Squibb & Co BMY, Daiichi Sankyo Ltd DSNKY, Gilead Sciences Inc GILD, Johnson & Johnson JNJ, Merck & Co Inc MRK, Novartis AG NVS, Pfizer Inc PFE, Roche Holdings AG RHHBY, Sanofi SA SNY, Takeda Pharmaceutical Co Ltd TAK and UCB SA UCBJY UCBJF point to the challenges to investing in the U.K.

The pharmaceutical sector contributes over 17.6 billion pounds ($22.76 billion) directly to the U.K. economy, with an additional 45 billion generated through research and development spillovers.

However, companies argue that growth is being stifled due to escalating mandatory payments. Under the current system, firms must pay between 23.5% and 35.6% of their branded medicine sales revenue to the NHS. This is significantly higher than other European nations, where comparable rates range from 5.7% to 9%, ABPI writes.

The ABPI report highlights that while the UK once led in medicine availability, it has slipped to ninth place in Europe over the past decade. One year after launch, medicine usage in England is only 52% of the average of comparable nations, rising to 62% after five years.

Additionally, the UK has dropped from fourth to tenth in global rankings for phase 3 clinical trials, lagging behind Spain, Germany and Italy.

Investment in UK pharmaceutical research has also declined, with the country’s share of global R&D investment falling from 7.3% to 5.7% in just three years.

This marks the fastest decline of any European G7 nation. Meanwhile, NHS funding has grown by 33% in real terms over the past decade, but spending on branded medicines has been capped at annual growth rates between 1.1% and 2%, declining by 11% when adjusted for inflation.

The industry and government have long collaborated on agreements to ensure NHS access to medicines.

The latest, the Voluntary Scheme for Branded Medicines, Pricing, Access, and Growth (VPAG), was intended to realign UK payment rates with international standards. While rates for newer medicines briefly dropped to 15.1% in 2024, they surged again in 2025 to 23.5% for newer medicines, with companies still paying 10.6%-35.6% for older products.

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