HEDS is part of the School of Health and Related Research (ScHARR) at the University of Sheffield. We undertake research, teaching, training and consultancy on all aspects of health related decision science, with a particular emphasis on health economics, HTA and evidence synthesis.

Friday, 17 June 2011

£1.1bn tax break for innovation

The HEDS Blog previously reported on proposals by the UK Treasury to introduce a ‘Patent Box’ whereby profits on new patents held in the UK would be taxed at 10%, rather than the current 23%.  The general proposals appear to have been accepted, in fact, even expanded to include existing patents.

A further consultation is now underway which focuses on the detail of the scheme.  The scheme will relate to profits from 1st April 2013 when 60% of available profits will qualify, with this increasing to 100% of available profits in 2017/18. The Patent Box is expected to cost the taxpayer £1.1bn in lost tax receipts in steady state.

One of the key arguments for rewarding innovation under value based pricing has been the spillover effects into the broader economy.  Now that these spillover effects have been rewarded via the tax system, will the calls for higher pharmaceutical prices to reward innovation stop?