Claims from new health secretary Matt Hancock that the pharmaceutical industry is trying to “rip off taxpayers” in the UK have shocked the sector.

Speaking to The Times newspaper on Saturday, Hancock said he would not “let big pharmaceutical companies hold the NHS to ransom,” these remarks seemingly applying to discussions over individual new drugs as well as the current negotiations to replace the PPRS pricing agreement.

Hancock’s remarks were prompted in particular by the ongoing and increasingly acrimonious row between the government, NHS England and Vertex over its cystic fibrosis drug Orkambi.

Negotiations over the pricing and reimbursement for the drug have been going on for two years, with both sides claiming they have made exceptional offers.

Orkambi’s list price is £104,000-a-year per patient, but Vertex has been in confidential negotiations with NHS England and ministers to discount this price, and also secure future funding for other CF drugs in its pipeline.

Vertex has called NHS England’s refusal to accept its latest offer as ‘outrageous’ with the company’s CEO Jeff Leiden writing to Prime Minister Theresa May over the summer to warn about the consequences for pharma investment in the UK.

Hancock hit back, telling The Times:

“I think that the offer they’ve got is incredibly generous, I think that they are attempting profiteering off the back of the NHS and they need instead to accept the deal and supply the drug right now.”

Many in the industry are angered that the health secretary has tarred the whole sector with the same brush, particularly as there have been some noteworthy pricing deals struck in recent months.

The most notable of those was the announcement last week that Novartis’ groundbreaking CAR-T treatment Kymriah would be available on the NHS for children with acute lymphoblastic leukaemia (ALL).

This deal was hailed as a great success by Novartis and NHS England’s chief executive Simon Stevens, who called the drug a “true game changer”.

The company’s UK general manager tweeted that he was proud the two sides had been “able to achieve one of the fastest approvals for cancer treatment to be available on the NHS – ten days from EMA approval to NHS availability! Shows what great collaboration can achieve for UK patients”.

However the comments from Hancock have raised fears that the government is set to impose new limits or cuts to the NHS medicines bill.

Last month it unveiled plans for an updated Statutory Scheme, a ‘back up’ plan for companies not in the main PPRS pricing system.

These plans include a sharply rising rebate rate, starting at 9.9% in 2019 and finally reaching 21.7% in 2021.  The ABPI has strongly criticised the plans, calling them ‘punitive,’ with worries that the government may take similar approach in the PPRS negotiations.

These talks must conclude in December if a new deal to replace the four year agreement is to come into force in January 2019.

It has become traditional for health secretaries to talk tough ahead of PPRS negotiations, but Hancock’s broadside has surprised and disappointed the sector.

Another huge headache for the UK pharma and biotech sectors is Brexit. Most notable is Hancock’s recent request for them to increase their stockpiling efforts in case of a hard exit from Europe, which is likely to cost the sector millions.

Leslie Galloway, chairman of EMIG, the UK industry group for small-to-medium pharma companies says these factors are endangering the UK sector.

Writing in PharmaTimes, Galloway says the government is no longer prioritising the sector and it is now an “Industry Abandoned”.

Commenting on the health secretary’s remarks, Galloway told Pharmaceutical Market Europe:

“Mr Hancock’s comments reflect a lack of understanding of an industry that is critical to the economy, employment and healthcare – we are not all large pharma.

“While the Secretary of State takes a hard line on industry – accusing companies of trying to “rip off taxpayers” – he may well undermine the industry co-operation he needs on medicines stockpiling to ensure the same taxpayers are able to access life-saving medicines after Brexit.”

The main industry organisation and PPRS negotiator, the ABPI, responded by saying it worked “closely with the Government to ensure that the overall spend on branded medicines is well managed,” but wouldn’t be drawn on the minister’s allegations of industry profiteering.

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