A “clawback crisis” is unfolding in the UK, where a punitive tax on pharmaceutical revenues is a key factor forcing companies to reconsider their presence in the country. This scheme, which requires drugmakers to repay between a quarter and a third of their UK income to the NHS, is seen as a major deterrent to investment.
The Association of the British Pharmaceutical Industry (ABPI) is campaigning for this rate to be drastically reduced to single digits, aligning the UK with its European competitors. They argue that the current high rate creates massive uncertainty and makes the UK an outlier in the global market.
This financial burden is directly contributing to the current investment freeze. When combined with low base prices for drugs, the clawback makes the UK market one of the least profitable in the developed world. This reality has underpinned the decisions by MSD and Eli Lilly to halt major London projects.
As the government attempts to renegotiate its drug pricing deal with the industry, the clawback rate will be a critical battleground. For pharmaceutical companies, a significant reduction is a precondition for any renewed commitment to investing in UK-based research, development, and manufacturing.