Lord Andrew Lansley Comments on the Development of the Next Pharmaceutical Price Regulation Scheme (PPRS)

With the passage of the Health Service (Medical Supplies) Costs Bill, the focus will increasingly move onto the shape of the next Pharmaceutical Price Regulation Scheme (PPRS).

The enhanced powers for Government in a statutory scheme will strengthen their hand in negotiations for a voluntary scheme.

As the last PPRS negotiations, and the recent changes, showed, the control of the drugs budget for the NHS is an over-riding objective for Government.

This is not, however, the only objective of the PPRS. It is intended to offer a fair return to industry, improve access to medicines for patients, as well as stability to both sides.

The PPRS has, overall, served the Government and industry well. That was why, back in 2009, I pledged to keep the 2009 – 2014 PPRS in place. However, given the mid-term revision to the payment percentage in the PPRS, the industry can hardly now think that the scheme offers the predictability or stability it wished for. Nor has it led to the access to medicines that the NHS anticipated.

A voluntary scheme, however, still offers the industry the opportunity to negotiate key industry objectives in return for budget stability. Among those will be improving access to medicines through the NHS, freedom of pricing at introduction and confidentiality of net pricing. For Government, access to medicines within a budget should equally be a sought-after objective.

To achieve this, the next PPRS deal should include a number of key characteristics:

  1. A realistic budget (i.e. in line with the change in the recent NHS budget), reflecting the growth in personalised medicines and specialised medicines for rare diseases.
  2. The agreement should be with Government but include NHS England as an associated party, with agreed approaches to promote uptake and the up-front handling of budget impacts of new medicines. This should avoid an arbitrary “budget impact” threshold imposed by NHS England.
  3. Maintain freedom of pricing at introduction but develop outcomes-based pricing as the basis for discounted pricing and rebates. [Outcomes in this context should relate to clinical benefits as incorporated into HTA, not the wider ‘values’ basis which NICE found too hard].
  4. The development of outcome measurement should be the basis for new initiatives which enable payment percentages towards the rebate to be modulated to reflect the variation between list price and an outcome-based price.
  5. The rebate should be deployed transparently to support patient access to medicines, especially including those more specialised treatments with a high cost per QALY and which address unmet need.

Finally, the scheme should have a commitment on both sides to stability. If companies opt out, or the voluntary PPRS is not a fit with their product cost/pricing structure, they must expect the statutory scheme to offer similar objectives and effects, even if varying in design.

The 2016/17 mid-term change in payment has undermined the predictability of the PPRS to industry, even if it restored, in part, expected payments to Government. This should be seen as aberrant, and the result of design problems in the 2014 scheme, and the lack of powers in the statutory scheme. The recent NHS England/NICE consultation on the budget impact of medicines is a further example of how the objectives of the voluntary agreement are not being carried through into NHS policy and practice.
This should strengthen both sides’ determination to reform the design of the scheme for 2019 onwards.

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Published 31. March 2017 in News UK