The UK Government (Department of Health and Social Care, DHSC) and the ABPI have announced today that they have agreed the Heads of Agreement for what will now be called a Voluntary Scheme for Branded Medicines Pricing and Access, expected to become effective from 1st January 2019 following the end of the current 2014 Pharmaceutical Pricing Regulation Scheme (PPRS”).
The details of the new Voluntary Scheme are still being finalised and, if agreed in full, will be published in December, at around the same time as publication of the new Statutory Scheme is expected to take place. Companies will then be asked to decide whether to agree to participate in the Voluntary Scheme or be subject to the Statutory Scheme.
The new Voluntary Scheme, which has been described as “a good deal for patients, the NHS and the UK life science industry” by the Health Secretary, Matt Hancock, provides a guarantee that growth of the NHS branded medicines bill will not exceed 2% per year for the next 5 years, delivering expected savings of around £930 million to the NHS in 2019. In assessing growth sales by Voluntary Scheme members, Statutory Scheme companies and parallel import sales will be taken into account. As under the 2014 PPRS, the new Scheme will require industry to make rebate payments in respect of expenditure by the NHS that exceeds the permitted growth. Other important aspects are said to be:
- The Government has stated that it is committed to improving the uptake and use of medicines across the five disease areas (yet to be identified) that offer patients the greatest health gain.
- The payment percentage applicable to sales by Voluntary Scheme members in 2019, based on the Government’s forecast of actual growth in expenditure on branded medicines, is 9.6%. New products (new active substances) will be excluded from company sales for the purpose of rebate payments for 36 months on a rolling basis from licence. Small companies will be supported through new exemptions.
- New products will continue to benefit from freedom of pricing at launch. Price increases will continue to need approval from DHSC, with a new provision for price increase approvals if there is evidence that a medicine is no longer economic to supply and where discontinuation would have a negative impact on patient health.
- Price modulation will be discontinued, although existing modulated prices can remain. Scheme members currently subject to historic cash payments (where payments were made under previous schemes rather than implementing list price reductions) will be offered the option of a one-off settlement.
- NICE basic cost-effectiveness threshold will be retained at the current range, £20,000 to £30,000 per quality-adjusted life year, for the duration of the scheme. However, there will be more NICE technology appraisals than before, with all new medicines and significant new indications appraised by NICE, unless there is a clear reason not to do so. The requirement for the NHS to fund all those products recommended by NICE in technology appraisal guidance will remain in place. The most innovative and best value drugs will be fast-tracked through the appraisal process so that patients can gain access up to 6 months earlier.
- Routine annual financial reviews (AFRs) will no longer be required other than to support applications for price increases.
Although the terms of the Statutory Scheme have also to be finalised, the payment rate will be higher than the Voluntary Scheme, where 2% growth in expenditure per year is permitted. The Voluntary Scheme companies will also benefit from freedom of pricing for new active substances and immediate line extensions, and small companies taper which are not available in the proposed Statutory Scheme.
An additional advantage is that the headline payment rate in the Voluntary Scheme will be adjusted based on the actual levels of growth rather than a fixed payment percentage.This new deal goes further than previous schemes to address some of the obstacles to medicines access and uptake in the UK. In return, the industry contributes to the affordability of medicines through the 2% cap on spend mechanism. It is yet to be seen what impact this scheme will have on industry investment in the UK.