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Freshfields Risk & Compliance

| 3 minutes read


With a UK general election looming, the Labour Party has announced a policy named ‘Medicines for the Many’ which would radically alter the life sciences landscape in the UK This blog considers the possible impact of the policy.

The policy is made up of four main proposals: (i) more compulsory or Crown use licences of pharmaceutical patents; (ii) requiring that drugs based on publicly funded R&D are accessible; (iii) incentivising research by means other than patents; and (iv) establishing a publicly owned generics manufacturer.

  1. Compulsory or Crown use licences to allow the government to issue a licence to another manufacturer to produce a generic version of a patented drug. The desired result is the NHS, or other purchasers, are able to access the drug at a lower price than the patent owner is charging. This mechanism already exists within the UK’s existing legal framework and therefore could be used immediately upon a Labour government becoming elected. The Labour policy document notes that there is currently ambiguity around whether compensation should be offered to the patent holder for lost profits arising from the compulsory or Crown use licence and states that the party’s intention is to revise the law to make it clear that there is no responsibility to pay such compensation. Under Labour’s proposals payment would be limited to a royalty set by the government. Such moves are likely to be challenged vigorously, including under the UK’s international treaty obligations.
  2. Imposing accessibility conditions on public research funding could also be implemented immediately, although there is likely to be a delay before the outcomes of this policy are felt. Conditions on public research investment cannot be imposed retrospectively and so any funding that has already been awarded would be unaffected. However, any future funding grants may be subject to any or all of a wide range of conditions suggested by Labour. Public research funding may be made subject to a requirement to reinvest a share of profits into productive economic activities or a public innovation fund, mandatory transparency rules requiring disclosure of R&D and marketing spend, profits and prices in other countries, or a requirement to make any resulting products available on ‘reasonable grounds’. The precise conditions would be decided after a period of consultation. The key risk here is that it will make UK institutions less attractive source of basic science for pharmaceuticals.
  3. The support of innovation through grants, subsidies or prizes, designed to incentivise work done in relation to ‘agreed health priorities’, which have been informed by stakeholders throughout the healthcare sector. The aim is to stimulate research in areas which, although potentially less profitable for pharmaceutical manufacturers under the current system, are seen as addressing urgent public health needs identified by all stakeholders in the healthcare sector. Discoveries made under this model would then be openly licensed, allowing for price competition among generic manufacturers. This is a fundamental change from the way in which the patent and regulatory system currently operates, Labour are proposing a gradual transition over many years, progressively introducing different aspects of the policy over time. The likely first steps would be to pilot such models for certain missions, for example antibiotic resistance, leading to the creation of a roadmap for how to introduce the model for the rest of the sector. The economic arguments over such a system have been debated for years, particularly whether it has an effective role outside those areas where the patent incentive does not function well.
  4.  Greater public control of the pharmaceutical innovation and supply chain. Labour proposes establishing a publicly owned, democratically controlled generics manufacturer. The goal is to ensure a constant, affordable supply of off-patent drugs, as well as facilitating straightforward enactment of the compulsory or Crown use licences proposed above. A further, related action suggested is the funding of later stage clinical trials. Having these trials conducted by publicly owned manufacturers is said to introduce more competition, drive up standards and make it easier to impose conditions on the private sector when licensing publicly funded technology. This is more of a standard nationalisation proposal and brings the risks associated with this model as well as impacting innovative and generic pharmaceutical manufacturers.

Of the four major policies proposed by Labour in ‘Medicines for the Many’, the increased use of compulsory or Crown use licences would have the most immediate impact and it is likely to lead rapidly to litigation. Conversely, transitioning to an alternative model for pharmaceutical innovation is a long term, multi-year project which would need to span multiple governments and be supported by long term investment to be implemented effectively.