Compass - Big Phama is killing the golden goose!

The UK's NHS risks bankruptcy from a soaring drugs bill which is outstripping Britain's GDP growth, according to a report published today.

The report, by the pressure group Compass, calls for regulation of the pharmaceutical industry to curb prices. The coalition of academics, campaigners and union leaders also warns that the billions spent by big pharma on seminars and conferences gives companies undue influence over doctors.

The report highlights several concerns:

• The drugs bill, which has gone up by £7.5bn since 1991, at a rate faster than GDP growth.

• Lack of innovation. The number of new drugs to treat conditions for which there are no effective remedies has been declining. Between 1993 and 2003 fewer than half the drugs licensed offered a potential improvement on those doctors already use – 152 out of 321.

• The £1.65bn spent annually by pharmaceutical companies on "continuing medical education" – such as conferences and seminars – for doctors, 300 times the Department of Health's contribution of £4.95m.

The report warns that the industry is in trouble because of a lack of innovation, declining productivity and governments' increasing reluctance to pay the high costs of drugs.

The pharmaceutical industry risks becoming the next big economic disaster after the banks, the report says, but it is too important to public health to be allowed to fail.

"The argument in this report is that the pharmaceutical industry must be more effectively regulated, so that all stakeholders – the public as well as the private investors – get a better deal. Like housing, transport, gas, electricity and now financial services, some things are too important to be left to the whims of the market," said Zoe Gannon, research fellow at Compass and the report's co-author.

"We have learnt from the banking crisis that some things are too important to let fail – the pharmaceutical industry is one of them. The report shows that unless we take action now we are not going to get the lifesaving drugs we need in the future," said co-author Jon Cruddas, the Labour MP for Dagenham.

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