AstraZeneca, GSK Among Executives Asked To Help Redesign UK Pricing Rules-Report

The U.K. government is bringing together senior pharmaceutical executives to help chart a new direction for the country's drug-pricing system.

Whitehall officials will invite reps from AstraZeneca Plc (NASDAQ:AZN) and GSK Plc (NYSE:GSK) to join the panel.

Sky News reported that the group will analyze successors to the Voluntary Scheme for Branded Medicines Pricing and Access (VPAG).

VPAG is set to expire in roughly three years.

The initiative reflects rising tensions. Pharmaceutical manufacturers have voiced concerns that the existing VPAG structure has hindered investment.

Also Read: UK Weighs 25% Rise In Drug Prices As Pharma Giants Pause Investments

Several companies have warned that the current rebate and pricing expectations could force them to delay or scale back research and development commitments in the U.K.

Earlier in December, the U.K. and the U.S. reached a landmark agreement to eliminate tariffs on British pharmaceutical products being exported to America.

Under the deal, the U.K. will pay 25% more for new U.S. medicines through the National Health Service (NHS) in return for a guarantee that U.S. import taxes on pharmaceuticals made in the UK will remain at zero for three years. 

Officials say the new working group will consider a range of options to replace VPAG. Among the proposals under discussion is an outcomes-based pricing structure. Another concept involves tying pricing to the level of research, development, and manufacturing activity a company carries out inside the UK.

U.S. drugmaker Merck & Co. Inc. (NYSE:MRK)said it plans to cancel its planned around $1.36 billion (1 billion Sterling pounds) London research center, citing Britain’s slow progress on life sciences investment and the undervaluation of innovative medicines by successive governments.

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