The ABPI and government agreed to bring forward a planned mid-scheme review of the 2024 Voluntary Scheme for Branded Medicines Pricing, Access, and Growth in April. However, the negotiations with the pharmaceutical sector ended without a resolution on Friday (22 August).

In an interview with The Guardian, Streeting accused the drug companies of being 'short-sighted' in their approach to the negotiations.

Under the current terms of the agreement – established when Rishi Sunak was prime minister – pharmaceutical companies pay a portion of their income from sales to the NHS back to the taxpayer, aiming to prevent the health service's costs from soaring.

Ministers have been reviewing the clawback tax in recent months, after it unexpectedly climbed to 23% this year. The increase was significantly higher than the predicted 15%, as the NHS spent more on medication than expected.

Streeting proposed changes to the scheme that would have saved £1bn over the next three years, but The Guardian reports, the pharmaceutical companies argued that this saving would be dwarfed by the clawback tax.

Streeting told the newspaper: ‘When it came out more expensive to industry than expected, we put forward an unprecedented offer to bring down payment rates for all future years of the scheme and accelerate growth in the sector – but the ABPI [Association of the British Pharmaceutical Industry] failed to reach an agreement. 

‘This was short-sighted and undermines our efforts to work collaboratively.'

He added: ‘I won't allow big pharma to rip off our patients or taxpayers. Life sciences are a great British success story.

‘We want the NHS to not only benefit from the revolution in life sciences and medical technology, but to drive it. We remain committed to building equitable partnerships with the sector to deliver for our economy and our society.'

The ABPI, which has been in discussions with ministers, declared on Friday that the UK's clawback tax is out of line with rates in other comparable European nations.

In response, ABPI chief executive Richard Torbett, said: ‘The UK will not realise the high ambition it has set for its life sciences sector until it addresses the core issue holding the UK back.

‘For too long, the UK has sought to be the place where innovation happens but not the place where it is used. Without change, the UK will continue to fall down international league tables for research, investment and patient access to medicines.'

Meanwhile, individual pharmaceutical companies have warned they will be forced to relocate drug trials and jobs away from the UK unless the NHS increases its spending on medications.