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A battle between ministers and the pharmaceutical industry over drug prices has forced the UK government to delay publication of its long-awaited plan for the life sciences.
The release of the “life sciences review”, initially scheduled for Monday, was delayed in large part because both sides had been unable to reach an agreement over a contentious review of drug pricing, according to three people familiar with the matter.
“It’s such a significant matter — it would be an elephant in the room if it hadn’t been embedded in the life sciences deal,” one government official said of the decision not to launch the strategy.
The review was due to set out how the UK can streamline regulation, introduce low-friction procurement and support high-potential companies to scale.
The government has identified life sciences as one of eight key sectors where the UK has particular strength and which could contribute to rising economic growth in the years ahead.
Health secretary Wes Streeting remains locked in tense negotiations with the pharmaceutical industry after a clawback tax unexpectedly soared last year.
Under the existing deal, the industry had to pay 22.9 per cent of UK sales back to the government this year, far more than the 15 per cent predicted. The tax rate changes each year and the new rate surprised drugmakers when it was published in late 2024.
A deal was originally expected to be announced around the time of the Spending Review last month.
After the rise in the tax, which is designed to control the NHS medicines bill, pharmaceutical companies warned that investment in the UK may be at risk.
The impasse is one of a growing set of challenges facing Prime Minister Sir Keir Starmer as he attempts to steer Britain out of a period of stagnant growth and low investor confidence.
The industry has been negotiating this deal while the Trump administration has been threatening to implement a “Most Favoured Nation” policy, which would peg US drug prices to lower prices abroad. The UK is one of the countries that the US would consider in its calculations.
Companies have been wary of agreeing to low prices in the UK, if it could be used to reduce prices in their largest market, the US. One person close to the matter said it was the first time that the sector was negotiating with a government “in full view of the US”.
Government officials said that the ball was now in the pharmaceutical sector’s court after an offer to try to improve the system was presented to the Association of the British Pharmaceutical Industry two weeks ago, which has not yet been accepted.
One person close to the industry said they were waiting for the government to come up with an acceptable deal before voting on it.
Another person said the government wanted the sector strategy to be a “kumbaya moment”, where they could say they had solved the problems about the commercial environment and move on to focusing on research and investment.
“I don’t think everyone is around the camp fire any more,” they said.
Earlier this year, pharma giant AstraZeneca decided to axe a planned £450mn vaccine facility in Speke, which came as major blow to Starmer’s government.
The health department did not immediately respond to request for comment.
