The narrative that Britain’s pharmaceutical pricing mechanism is the benchmark for global healthcare systems has taken a hit. Canada’s recent deal to secure generic semaglutide, better known as Ozempic, at a fraction of the UK price raises uncomfortable questions about efficiency and value for money. For years, the Treasury has patted itself on the back for negotiating discounts through the Voluntary Scheme for Branded Medicines and Health Technologies. Yet here we are, watching a former dominion outmanoeuvre us on a drug that has become as much a cultural phenomenon as a medical breakthrough.
Let’s talk numbers. An Ozempic pen in Britain costs the National Health Service roughly £73 per month. Canada’s newly approved generic version will come in at around CAD 100, or about £57. That is a 22 per cent saving. For a drug that is now prescribed to over 100,000 Britons for Type 2 diabetes and increasingly for weight loss, the cumulative cost to the Exchequer is not trivial. When you multiply that gap by the number of patients and consider the five-year patent cliff, we are looking at hundreds of millions of pounds that could have been redirected to hip replacements or mental health services.
The standard defence from the Department of Health is that our system ensures rapid access to innovative medicines. But generic Ozempic is not innovative. Semaglutide has been on the market for years. The molecule is well understood, and manufacturing processes have been optimised. The delay in Britain approving a generic version is not about safety. It is about the cosy relationship between the National Institute for Health and Care Excellence and Novo Nordisk. The Danish drugmaker has enjoyed a monopoly in the UK because our pricing model gives them little incentive to license generics early. Canada, by contrast, used its public patent holder to challenge Novo Nordisk’s patents and clear the way for a cheaper option.
This is a classic case of regulatory capture. The voluntary scheme is meant to cap spending growth, but it does nothing to encourage competitive pricing once a drug goes off-patent. Instead, the NHS continues to pay premium prices long after the innovation premium has expired. The Canadian approach, which involves direct government intervention to break monopolies, is more aligned with the principles of free-market competition. Yes, you heard me: government intervention can actually enhance market efficiency by removing artificial barriers to entry.
The implications go beyond Ozempic. The UK currently spends about £17 billion a year on branded medicines. If we could replicate the Canadian success across just a handful of blockbuster drugs, the savings could run into billions. That is not an abstraction. That is real money that could be used to cut the deficit, ease the burden on taxpayers, or invest in genuinely innovative therapies.
Critics will argue that generic competition could harm the UK’s attractiveness as a launch market for new drugs. But that is a flawed argument. The pharmaceutical industry responds to intellectual property protection and large, predictable markets. Britain offers both. Negotiating harder on generics does not threaten the patent system for new molecules. It simply ensures that the monopoly profits do not extend beyond the patent term. That is what a functional market should do.
So where does this leave the much-vaunted British model? Looking increasingly like a cosy cartel disguised as a value-for-money scheme. The Treasury should be demanding answers. And the new medicines pricing review, due next year, must take a hard look at Canada’s playbook. If we fail to adapt, we will be the ones paying the price, literally.
In the end, markets punish inefficiency. Britain’s drug pricing model has been exposed as inefficient. Canada’s generic Ozempic is just the first tremor. The bigger shake-up is still to come.
