The Association of the British Pharmaceutical Industry (ABPI) has called on the government to take urgent action to reverse a decade-long decline in investment and restore the UK’s position as a global leader in life sciences.  

In its pre-Budget submission, the association cautioned that over the past decade, the UK’s life sciences sector—once recognised as one of the most advanced and innovative globally—has experienced a significant decline in both investment and competitiveness.

It noted that foreign direct investment (FDI) in UK life sciences has fallen by 58 percent since 2021, while pharmaceutical R&D investment dropped by nearly GBP 100 million in 2023.

With the government acknowledging a “decrease in investment and support” for the sector, the ABPI has outlined a clear plan for how the Treasury can deliver growth and secure the UK’s position as a global life sciences hub.

The association is urging the Treasury to work closely with the Department of Health and Social Care (DHSC) to improve the UK’s commercial environment and create the right conditions for greater investment in innovative medicines.

Richard Torbett, Chief Executive of the ABPI, said, “The UK has the talent, science base and heritage to lead the world in life sciences, but right now we are falling behind. To change course, the Treasury and the Department of Health must work together to create the right conditions for investment in innovation. If we act now, we can restore the UK’s global standing, unlock billions in R&D investment, and deliver better outcomes for patients and the economy alike.”

The ABPI’s submission identifies two immediate priorities: updating NICE’s outdated cost-effectiveness thresholds, which have not changed for over 20 years, and reducing the UK’s high and unpredictable branded medicines revenue rebate rates to single digits, comparable with other European countries.

According to the ABPI, NICE’s baseline cost-effectiveness threshold has remained static since 1999, resulting in a 47 percent decline in what the UK is willing to pay for proven life-improving medicines. Adjusting the threshold, it said, would only affect the evaluation of new medicines/indications and not change the prices of medicines already approved and used by the NHS.  

“Increasing the threshold will also yield broader economic benefits by improving the UK’s competitiveness, enabling pharmaceutical companies to invest, conduct clinical trials and engage in joint projects with the NHS,” it added.

The association estimates that improving the UK’s investment climate could help recover between GBP 2.2 billion and GBP 3.4 billion of R&D investment by 2028, while driving productivity and delivering better health outcomes.

To help the UK regain competitiveness and unlock new investment, the ABPI’s submission sets out six key policy recommendations.

It calls for returning investment in innovative medicines to internationally competitive levels by addressing the low and outdated cost-effectiveness thresholds used by NICE and the uncompetitive payment rates under the Voluntary Scheme for Branded Medicines (VPAG), ensuring a sustainable environment for innovation.

The association also urges the government to maintain existing investment incentives by protecting the Patent Box, R&D tax credits and full capital expensing, which are vital for attracting innovation-led investment.

Additionally, the ABPI recommends updating the Treasury’s Green Book methodology to ensure the economic appraisal of medicines manufacturing fully reflects transformational and long-term productivity benefits.

It also calls for restoring the MHRA’s Trading Fund status to give the regulator greater flexibility to plan and invest for the long term, supporting its role as a world-class, innovation-friendly agency.

Further, the submission suggests improving the Global Talent Visa’s competitiveness by spreading the cost of the Immigration Health Surcharge to reduce upfront barriers for top international researchers and specialists.

Finally, it recommends ensuring that VAT is not applied to ‘Free of Charge’ medicines under early access schemes to protect early access for UK patients and maintain the country’s attractiveness for clinical trials.