Cabinet secretary “threatened” drug companies with price caps to help NHS

Report claims Sir Jeremy Heywood secured extra £250m for health service with ultimatum

By Jim Dunton

17 Feb 2017

Sir Jeremy Heywood threatened big pharmaceutical firms that they would face the imposition of new price caps on NHS spending if they did not volunteer additional funding to help the health service, it has been claimed.

Heywood, who is cabinet secretary and head of the civil service, managed to secure an additional £250m for the NHS by the tactic, deployed at a meeting with trade body the Association of the British Pharmaceutical Industry, a report alleges today.

The negotiations follow shortfalls from a 2014 agreement to cap health service spending on branded medicines at roughly £8bn, with drugs companies obliged to refund any additional funds to the Department for Health.

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A report in The Times says Heywood used the November meeting to unleash an “aggressive” attempt to raise money to cover a “£400m-£500m” shortfall in the NHS’ budget for 2017-18.

The paper said minutes from the meeting indicated the ABPI felt the best course of action was to agree a deal with the government to avoid a “significantly more acrimonious relationship” ahead of any future price negotiations, which would impact its ability to “shape the UK commercial environment”.

David Watson, an ABPI director, told The Times the organisation had “agreed to meet them halfway” on the demand for extra finances.

“We’re aware that we’ve got a new industrial strategy coming along and there is a lot up for grabs about regulation after Brexit that we want to be working on as partners with government,” he said.

Civil Service World asked for the Cabinet Office’s response to the story. It declined to comment.

Labour and the Liberal Democrats used the story as an opportunity to question the government’s record in funding the NHS.

A report published today by the Royal Society of Medicine blamed “failures in the health and social care system linked to disinvestment” for a substantial increase in mortality recorded in England and Wales.

It said there had been 30,000 excess deaths across both nations in 2015, and that the month of January had seen “a large spike” in deaths among the older population, who are most dependent on health and social care.

Professor Martin McKee, from the London School of Hygiene & Tropical Medicine, said the impact of cuts resulting from the imposition of austerity on the NHS has been profound. 

“Expenditure has failed to keep pace with demand and the situation has been exacerbated by dramatic reductions in the welfare budget of £16.7bn and in social care spending,” he said.

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