Viatris (NASDAQ:VTRS) has become the latest drugmaker to voice opposition to changes to the U.K. voluntary medicines pricing agreement after its U.S. rivals AbbVie (ABBV) and Eli Lilly (LLY) left the deal early this year, citing strict government requirements.
Canonsburg, Pennsylvania-based company warned Thursday it would stop selling some essential medicines currently in short supply in the U.K. if the British government goes ahead with its plans to modify the deal.
The U.K.’s Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) limits the growth of branded medicine expenditure at 2% per year at the National Health Service (NHS), and the industry participants to the five-year deal returned any spending beyond the cap.
With healthcare costs rising during the pandemic, the “voluntary” payback rate jumped to 26.5% this year from an initial 5% in 2019 when the deal was formed.
The tax is adding pressure to the U.K. business environment already challenged by the rising costs associated with the Ukraine war amid other inflationary headwinds, Reuters reported as Viatris’ (VTRS) U.K. country manager Matthew Salzmann as saying.
He added that the company has decided to prioritize other markets where it can be profitable, and Viatris’ (VTRS) Head of Europe Artur Cwiok noted that the German and Portugal governments were considering changes to drug pricing.
Viatris (VTRS) projects it will have to pay £60M ($71.62M) to the government under the program this year. If the company leaves the voluntary pricing deal, it will be part of the statutory scheme, where revenue payback rates are expected to reach 27.5% from 24.4%.
In January, when AbbVie (ABBV) and Lilly (LLY) left the voluntary scheme, representative to the deal, the Association of the British Pharmaceutical Industry (ABPI) said that revised rates would require drugmakers to return $4.0B sales revenue this year, up from £1.8B in 2022.