Under the new five year voluntary PPRS, the pharmaceutical industry has agreed to keep NHS expenditure on branded medicines flat for two years, with the pharmaceutical industry underwriting any further expenditure by the NHS within agreed boundaries. The deal, which will begin on 1 January 2014, recognises the financial challenges facing the NHS. After the first two years, growth levels on branded medicines have been agreed.
Commenting on the announcement, ABPI Chief Executive, Stephen Whitehead said:
“Whilst the deal allows us to move forward and focus on the key issue of ensuring NHS patients get access to the medicines they need, the Government needs to recognise that medicines are an investment in patient care and not just a cost to be managed. We have agreed to play our part, recognising the financial challenges facing the NHS. We now need the Government and the NHS to respond positively to this unique opportunity to demonstrate their active commitment to improving patients’ access to the latest medicines. We have five years to fix the access problem so that NHS patients get the best quality healthcare they deserve and to address the long history of low patient usage of innovative medicines in the UK.
“The ABPI represents companies of all sizes, and we need to recognise that this deal could have additional implications for smaller companies. Whilst the Government has protected some exemptions for companies with up to £5m of NHS sales, we are disappointed that they have not been prepared to fund exemptions for companies with NHS sales between £5m and £25m. Companies in this category will find this extremely tough, and we need the Government to work to ensure the UK is attractive to smaller companies.”
ABPI President Deepak Khanna added:
“These have been the most complex negotiations we have ever had with Government and it should not be underestimated how difficult this will be for the industry. The negotiations were built on a myth that medicines are expensive in the UK, which is not true. The UK already spends amongst the lowest on medicines as a percentage of GDP and has some of the lowest prices in Europe, yet UK patients still do not always get access to the most innovative medicines. In 2011, the overall spend on medicines represented less than 10% of total UK-wide NHS expenditure.
“We need to continue to invest in the industry if we want to make sure that patients benefit from innovation. The commercial environment in the UK has an impact on its attractiveness for research and development investment and it’s too early to say what impact this settlement will have on industry investment.”
A copy of the full Heads of Agreement can be found here.
Notes to editors
The statutory scheme
The Government has also today announced the details of the statutory pricing scheme. This is the alternative for those companies that choose not to join the negotiated voluntary pricing agreement. The statutory scheme currently applies to about 10 per cent of the branded medicines used in the UK.
Commenting on the statutory scheme, Stephen Whitehead said:
“We are extremely disappointed by the Government price cut of 15 per cent inflicted on the industry in the statutory scheme. Asking companies who enter the statutory scheme to contribute even more at a time when the industry has already made huge savings is excessive and unnecessary.
“The ABPI is concerned about the impact of potential future changes to the statutory scheme, which Government could introduce at any time. Companies will need to take this into account when making decisions about which scheme to join.”
Value based assessment
In June this year, the Government broadened the remit of the National Institute for Health and Care Excellence (NICE) to ensure that new medicines are assessed according to a broader scope of value to patients and society, and not just on cost.
Commenting on value based assessment, Stephen Whitehead said:
“This new PPRS agreement represents a further evolution of value based assessment, and reflects specific proposals in the Coalition Agreement. It also signals a further step-change towards the use of a broader definition of value for appraising new medicines by NICE in England and Wales.
“The process for building a broader perspective of value into the assessment of medicines is now subject to public consultation by NICE. We hope that NICE will seize the opportunity to adopt the broader definition of value in order to lead the way in encouraging and endorsing the use of more innovative medicines. NICE needs to fully support the NHS in making innovative medicines rapidly available to all eligible NHS patients, and as partners, we stand ready to work alongside NICE, the NHS, and with all stakeholders, including patient organisations, to ensure that this happens.”
About the ABPI
The ABPI represents innovative research-based biopharmaceutical companies, large, medium and small, leading an exciting new era of biosciences in the UK.
Our industry, a major contributor to the economy of the UK, brings life-saving and life-enhancing medicines to patients. Our members supply 90 per cent of all medicines used by the NHS, and are researching and developing over two-thirds of the current medicines pipeline, ensuring that the UK remains at the forefront of helping patients prevent and overcome diseases.
The ABPI is recognised by government as the industry body negotiating on behalf of the branded pharmaceutical industry, for statutory consultation requirements including the pricing scheme for medicines in the UK.
ABPI Press Office
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