Wes Streeting is often hailed as the brightest star in a Cabinet of dullards. But the Health Secretary, along with Keir Starmer, is helping to bring about a slow-motion catastrophe for Britain’s vital life science and medicine industries.
The Government claims that ‘growth’ is its central mission. But it is smothering these crucial sectors, which, if they were only left to prosper, could propel Britain forwards, boosting our research, productivity, enterprise and national wellbeing.
In just 14 months in office, Labour’s flawed approach to pharmaceuticals has caused an exodus of new investment in medicines and life sciences – the umbrella term for the critical and fast-growing world of pharmaceuticals, biotechnology, medical devices and so on.
Government support for new vaccines – so essential for our health security in any future pandemic – has been axed. A stealth tax on medicines used in the NHS has soared. The quango Nice, which controls the purse-strings on licensing new drugs in Britain, is slamming the door on life-saving new treatments.
Bleak
And, for the first time, there is a serious risk that Britain’s most valuable corporation, drugs giant AstraZeneca – worth £180billion on the London Stock Exchange – could start listing its shares in New York.
It all paints a bleak and dispiriting picture.
The Health Secretary is helping to bring about a slow-motion catastrophe for Britain’s vital life science and medicine industries
Britain’s celebrity-obsessed culture rarely has time to cheer its great universities, except perhaps as tourist attractions or film sets. Yet the research institutions of Oxford and Cambridge, as well as UCL and Imperial in London, are our true crown jewels: the source of brilliant leaps forward in science, medicine and artificial intelligence. Cambridge alone has won 125 Nobel prizes in its history, including for discovering the ‘double helix’ structure of DNA.
British universities regularly feature in lists of the world’s greatest centres of research and are part of the reason that so many international drug companies have set up development and production facilities here.
So the Government ought to be celebrating and nurturing them. Instead, despite Labour injecting an extra £22billion into the NHS in 2025-26 alone, Britain still spends less on drugs than any other rich country.
This is doubly foolish: there is strong evidence that innovative drugs can help empty hospital wards by easing the pressure on beds. So if only the Government would help to bring new drugs to market, they could reduce some NHS demand at a stroke.
Yet it is the potential departure of AstraZeneca that represents the most immediate danger. Astra has now said it is pausing investment in Cambridge, where it has built one of the finest research and development labs in the world. Meanwhile, it has announced an eye popping $50billion (£37billion) of new investment in its biggest market: the United States.
Astra, readers may remember, was a hero of the pandemic. Its rapid development and manufacture of the so-called Oxford vaccine saved millions of lives across the world. Yet the company has had enough of Labour’s anti-business approach.
Its boss, Sir Pascal Soriot, is furious at Keir Starmer’s defunding of a £450million vaccine plant near Liverpool, frustrated at Wes Streeting’s hefty stealth tax on drug suppliers to the NHS, and bridling at how difficult the British authorities increasingly make it to bring new treatments to market.
Astra is a global leader in developing the immunology drugs that are steadily transforming treatment for cancer. As someone who received one of these new drugs on a private basis as part of chemotherapy treatment two years ago, I am immensely grateful for the company’s cutting-edge work in oncology.
Astra shifting investment to America is an appalling blow. But the company is not alone in its bearish approach to the UK. The past few days have seen an unedifying cascade of pharma groups heading for the exit – and their departures are all the more regrettable given that many of them initially doubled down on research in the UK following Covid.
America’s Eli Lilly is putting its planned £279million investment in Gateway Labs, a London start-up established in October last year, on hold pending more clarity on the British Government’s approach to life sciences.
Germany’s Merck is suspending a £1billion research centre in London. Swiss Novartis has placed UK investment ‘under review’.
AstraZeneca is pausing investment in Cambridge but has announced an eye popping $50billion (£37billion) of new investment in its biggest market: the United States
And our own GlaxoSmithKline, developer of blockbluster vaccines for shingles and respiratory disease is also ‘rethinking’ new investment here.
Last night, Glaxo revealed that it plans to spend up to £22billion in the US over the next five years, including at facilities in Pennsylvania.
Stealth
These moves by big pharma against the Government might initially be dismissed as a negotiating tactic to persuade Whitehall to back down on the size of the rebate that drug companies pay to the Government on NHS prescriptions.
Because the NHS buys drugs in bulk, drug firms have for years been encouraged – these days, compelled – to send a proportion of their revenue back to the Government as a ‘rebate’ in what is clunkily known as the ‘Voluntary Scheme for Branded Medicines Pricing, Access and Growth’ (VPAG).
In what amounts to a stealth tax, Labour this year increased the VPAG from 15 per cent to 23 per cent, and it is now heading even higher.
The industry calculates that this tax will mean the companies hand over some £13.5billion into the Exchequer (in addition to all the other taxes they pay) which will starve pioneering research and development work of funds and help to make Britain a less attractive place to invest.
Having escaped the sclerotic bureaucracy of the European Union Drugs Agency thanks to Brexit, Britain had a chance to become the world’s trailblazer in developing drugs. The speed with which we launched Covid vaccines showed our ability to test and fast-track treatments.
Eroded
And yet our competitive advantage in this area is being systematically eroded. Britain spends 9 per cent of its total health budget on medicines, which is way below the EU average. Germany spends almost twice that, at 18 per cent and the US 17 per cent.
It has become all too clear that this Labour Government believes that, because big pharma is profitable, it doesn’t require any help from the public purse. It should pay for all its own research and development, while being taxed aggressively on any profits.
Meanwhile, the Government is hell-bent on ploughing upwards of £700million of taxpayers’ money into encouraging the conversion of the UK’s blast furnaces into ‘greener’ electric arc steel making.
There may be some rationale to this, but it should not be either/or. Steelmaking is vital to the UK’s ambitions to increase spending on defence. But older industries such as steel and shipbuilding hardly represent the white heat of technology on which Britain’s future rests.
There are some examples of co-operation between big pharma and the NHS. This year, Glaxo launched a major trial to investigate if its shingles vaccine, Shingrix, is linked to a reduced risk of dementia. Earlier small-based studies have found encouraging results. But such opportunities are rare.
Investment is fleeing overseas. And it could all soon get even worse. Unless the Cabinet comes to its senses, an economic tragedy will unfold.
