Voluntary Scheme

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The Association of the British Pharmaceutical Industry (ABPI) has published a report (the Report) setting out its members’ concerns regarding the operation of the 2024 Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG).

VPAG is an agreement between the Department of Health and Social Care (DHSC), NHS England and ABPI, which came into effect on 1 January 2024.  It is the latest in a series of voluntary schemes, intended to manage NHS expenditure on branded health service medicines and operates by controlling prices, limiting profits and, importantly, by imposing a requirement for scheme members to make repayments to Government, reflecting NHS expenditure on medicines in excess of permitted growth and calculated as a percentage of eligible sales.  A key driver for changes introduced in VPAG was recognition that the level of repayments under the previous scheme had become unsustainably high (21.2% in 2023).  Therefore, while industry accepted what is described in the Report as an “exceptionally tough deal” this was in the expectation that the new scheme would, over time, bring repayment rates for newer medicines down to below 10%, consistent with the position up until 2021. However, while the repayment rate for newer medicines was set at 15.1% in the first year of VPAG, the rate for 2025 is 22.9% (with an additional 0.6% payable under an investment programme). The Report describes rates of this magnitude as “unsustainable”.

The Report analyses the reasons that repayment rates for newer medicines have ended up so much higher than predicted under VPAG, and calls for the Government to work with industry on its proposed solutions. It also sets out the consequences of requiring industry to pay such high repayments rates, including worse access to medicines for UK patients and lower investment by industry in the UK.Continue Reading ABPI calls for changes to “unsustainable” medicines pricing scheme

In a judgment handed down today, 10 July 2023, Mr Justice Turner refused permission for an application by the British Generic Manufacturers Association (BGMA) for judicial review of the refusal of the Secretary of State for Health and Social Care (SoS) to appoint it as a second “industry body” (in addition to the Association of the British Pharmaceutical Industry (ABPI)) for the purposes of negotiation of the next voluntary scheme controlling the prices of branded health service medicines. The result of this decision is that negotiation will involve only the SoS and the ABPI, albeit taking into account submissions from other industry bodies (including the BGMA) and other stakeholders.Continue Reading BGMA refused permission for judicial review in relation to negotiation of the voluntary scheme

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:Continue Reading The UK 2019 Voluntary Scheme