Key terms decided for voluntary scheme on branded medicines pricing and access

The heads of agreement for the new voluntary scheme for branded medicines pricing and access, the successor to the Pharmaceutical Price Regulation Scheme (PPRS), have now been published following negotiations between by the Association of the British Pharmaceutical Industry (ABPI), the Department of Health and Social Care (DHSC) and NHS England.

In a written statement released by the Parliamentary Under Secretary of State for Health, Lord O’Shaughnessy, it was announced that the scheme aims to improve patient access to the best available treatments by giving faster adoption of cost-effective medicines. The ABPI have stated the changes will mean patients could have access to new medicines up to six months earlier. Terms of the scheme that would aid this include faster NICE appraisals, more efficient horizon scanning and early engagement with companies to ensure clinicians are ready to use the new medicines as soon as they become available.

Another aim is to keep branded medicines affordable for the NHS. This would be aided by more NICE technology appraisals, so all new medicines are assessed by NICE, and more commercial options to incentivise better value for the NHS. Lord O’Shaughnessy states that:

“the deal is expected to deliver a benefit of £930m next year, to be reinvested into the NHS.”

There is also an ‘affordability mechanism’ which includes an agreement by pharmaceutical industry members of the scheme to cap growth on NHS-branded medicines sales. Mike Thompson, Chief Executive of The Association of the British Pharmaceutical Industry, said on this:

“Under the scheme the NHS will have absolute certainty that the sales of branded medicines will not grow by more than two per cent in any of the next five years – or industry refunds the money.  This is a significant contribution by pharmaceutical companies to support the NHS.”

The deal also supports the development of innovative new medicines with rolling 36-month exemptions from payments for new active substances for member companies of the scheme.

The government announcement and policy paper containing all of the key terms is available here. The full scheme, if agreed, will be published by the end of this year and will operate from 1 January 2019 for five years.

The written statement from the Parliamentary Under Secretary of State for Health, Lord O’Shaughnessy, is available here.

The ABPI news article is available here.

MAP’s insights

Positive MAP Insights

MAP is pleased that the heads of agreement document includes a strong statement in favour of NICE increasing its capacity for technology appraisals. This should help accelerate patient access to medicines. In addition, the payment rate of 9.6% for the first year is lower than some predicted, and lower than that proposed in the statutory regulations scheme for pharmaceutical prices of earlier this year. A new 36-month rolling exemption from rebate payments for new active substances is likely to be a significant boost to manufacturers, especially for smaller companies.

Cautionary MAP Insights

Although the growth rate is capped at 2%, there is likely to be a change in reimbursement rate year-on-year. The cost-effectiveness threshold used by NICE of £20,000-£30,000 per QALY will remain in place, giving stability to the industry while not providing any additional pricing incentive. MAP is cautiously optimistic on the reaffirmed commitment of NHS England to negotiate with companies on price, and its future publication of a commercial framework to facilitate this.

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Published 23. November 2018 in News, News UK