On 1 April 2018, the statutory regulations were revised to align more closely with the voluntary PPRS, imposing a 7.80% rebate on prescription-only medicines (POMs).
Why did the statutory regulations change?
The previous statutory regulations imposed a 15% reduction of prices as at 1 December 2013. However, most companies within the statutory regulations were offering their products with a greater discount than 15% and so the Department of Health and Social Care (DHSC) therefore did not receive the same level of savings from the statutory regulations as they did from the PPRS. This led to the need to revise the statutory regulations.
What do the new regulations entail?
The new statutory regulations have imposed a similar rebate scheme to the PPRS, with a payment percentage of 7.80% on all presentations (including new active substances, but exemptions apply).
The 15% price cut enforced on prescription-only medicines (POMs) that existed on 1 December 2013 has been reversed. Companies will need to inform the DHSC if they wish to increase their price to reverse the 15% price cut.
Do all companies pay?
The statutory regulations are imposed on products for companies not part of the voluntary PPRS but the company may not necessarily be liable to make the rebate payment. The regulations state that the company responsible for the first relevant supply of the presentation is liable to make the payment. This means that if a company manufactures the product but does not supply the product within the UK, then they would not be subject to the statutory rebate.
Who is responsible for making the payments?
- If the marketing authorisation (MA) holder is based in the UK and supply the presentation then the company will make the payment
- If the UK company supplying the presentation is not the MA holder but is in the same group as the MA holder, then that company will make the payment
- If the UK company is neither of the above, then the first company supplying the presentation for NHS use will make the payment
If there is uncertainty as to who is subject to make the payment, the DHSC can provide a written notice to clarify who would be liable to make the payment.
The statutory regulations apply to all branded prescription only medicines (POM) (as advised by DHSC PPRS team). However, further exemptions apply to the following:
- Frameworks/contracts where the tender close date was on or before 1 April 2018
- Very low-cost presentations where the list price is less than £2.00
- Products from companies with total sales to the NHS of <£5m
- Parallel imports i.e. medicines which are imported and supplied to the NHS by a party other than the scheme member or a parent company
Companies subject to the statutory regulations will be required to provide information on a quarterly and annual basis.
- Sales reports (through the web-based system)
- Quarterly sales reports are due within 30 days of the last day of the quarter
- Annual sales reports are due within nine months of the company’s financial year-end and must be audited
- Written declarations must also be submitted, with approval (from a director) of the information provided
- Presentation level reports are also required annually, due two months after the company’s financial year-end
The DHSC requires that companies, within the statutory regulations, launching new products must provide at least 60 days notice. The information requirements above highlight the minimum information needed, and additional information can be requested through an ‘Information Notice’.
Failure to comply with these rules may result in a penalty for failure to notify a launch.
Every application will be assessed on its own merit, considering:
- The type of drug (e.g. orphan drug)
- The company
- The reasonableness of each cost
- New active substance (no freedom of pricing)
The pricing committee, which meets every 2-3 weeks will review new product applications. Companies must get approval before launching a new presentation and before input to dm+d.
If a company fails to adhere to the statutory regulations, they may be penalised by the DH. Penalties vary based on the company’s sales as follows:
- Company sales <£100m: £2,500 per day for first 14 days rising to £5,000 per day after
- Company sales >£100m: £5,000 per day for first 14 days rising to £10,000 per day after