Why pharma should pay attention to the Labour Party’s plans for the NHS and clinical trials

In the wake of the Conservative Party’s bruising local election results, there is a continued focus on what a Labour-led Government might mean for investors in the UK. As we have previously discussed, one of the key battlegrounds is in the area of life sciences. Both Prime Minister Rishi Sunak and Opposition Leader Sir Keir Starmer have tried to present themselves as pro-science and pro-innovation.

In an interview this week, the Shadow Health Secretary, Wes Streeting, has continued to build on this, promising to boost the number of clinical trials in the NHS, as well as foster a more pro-business culture. Despite Government rhetoric, the last few years have seen the UK fall down international leagues tables. The Labour Party intends to unveil more details of its healthcare mission in the coming weeks, but a key policy already highlighted is to standardise how companies interact with the NHS (on trials). It remains to be seen what their proposal will be, given that in 2022 NHS England already expanded the use of template contracts and terms for clinical trials.

His promises come against a backdrop of several reforms by governments to try to address issues holding back innovation. We have previously discussed how the UK has sought to tackle some of the relevant EU-legacy data protection problems.

Tax is also a factor, as the Government has tried to encourage more of a UK nexus for innovation to qualify for R&D tax credits, employing both carrot and stick. On the one hand, the recent Budget announced an enhanced credit for loss-making R&D intensive SMEs, which included life sciences companies among the intended beneficiaries. On the other, the recent consultation on combining R&D tax reliefs suggests a limitation whereby R&D activity would generally have to be physically carried out in the UK for tax relief to be granted, including where it is outsourced to a third party.

There are also business opportunities in this anticipated growth in clinical trials, as the rise of wearables and other tech solutions should make it possible to reach more participants and gather more data - subject to those same data protection issues. Given how much money has flowed into biotechs in recent years, we are likely to see a backlog of start-ups waiting to conduct trials if capacity is not improved.