Mark Samuels, Chief Executive of the British Generic Manufacturers Association (BGMA), said: “Raising the VPAS tax to 26.5% will damage the UK’s medicines supply because it will make some products lossmaking. It is more than a five-fold tax increase from 2021, and no industry can cope with this unpredictable and exceptional tax volatility.

“The NHS runs on generic and biosimilar medicines, with four out of five prescriptions being filled by off-patent products. Despite the UK’s competitive market already delivering the lowest prices in Europe, regulation means branded generics and biosimilars are subsumed into the VPAS scheme. It means manufacturers suffer a double-whammy – competition reduces prices by up to 90%, plus a now 26.5% VPAS tax on top. This situation is not economically sustainable. It makes some products lossmaking, forcing manufacturers to take very difficult decisions on which medicines they can supply.

“The high VPAS tax for 2023 risks more medicines shortages, rising prices for the NHS via reduced competition, and new medicine launches to the UK being deferred. I am gravely concerned about this situation.

“2023 will be the last year of the present 5-year scheme. The next 5-year branded medicines scheme, starting in 2024, will be negotiated from early next year. To support a sustainable long-term supply of medicines, it must recognise where competition is already working to provide the NHS with significant financial savings and better patient access.”