Will proposed updates to statutory branded medicines pricing scheme help protect medicine supply?

The government has proposed updates to a scheme controlling the cost of branded medicines that it says will help protect medicines supply and keep prices competitive.

It has launched a consultation on the statutory scheme to control the cost of branded health service medicines.

But the body representing the pharmaceutical industry has criticised the proposals.

Proposed updates to the scheme are designed to keep medicines manufacturers supplying to the UK market by allowing them to retain more revenue.

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If the scheme was not economically viable for manufacturers, DHSC said that pharmaceutical companies would be likely to request an increased price for medicines anyway – which the DHSC would either have to accept, resulting in increased spending for the NHS, or refuse, potentially resulting in manufacturers no longer selling certain branded medications to the NHS.

The updates propose also setting different levels of payment for medicines subject to different levels of competition, a moved welcomed by the British Generics Manufacturers Association (BGMA).

Mark Samuels, BGMA chief executive, told The Pharmacist that this was important to avoid worsening the risk to medicines supply.

‘A high rebate rate can make low-priced drugs loss-making and no longer viable to supply. Competition brings the NHS the benefit of the lowest medicine prices in Europe,’ he said.

‘However, manufacturers cannot afford to pay a soaring rebate on top. Therefore, seeing competition recognised within the consultation scheme is heartening.’

DHSC also suggested that the proposed changes will boost life sciences investment in the UK, bringing associated wider benefits to the economy – a claim that the Association of the British Pharmaceutical Industry (ABPI) has refuted.

The ABPI said in a statement this month that the proposed rebate rates seek to hold the percentage of income that manufacturers must pay the government at ‘historic highs’ of between 21-27%.

‘The accompanying cost-benefit analysis ignores any negative impact this may have on medicine supply and wrongly claims it will boost investment,’ the APBI said of the government’s consultation.

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The representative body also warned that consulting on the statutory scheme while discussions around the future of a coexisting voluntary scheme are underway risks undermining these ‘delicate negotiations’.

The voluntary scheme for branded medicines pricing and access (VPAS) is currently being negotiated before it expires at the end of the year.

Under VPAS, manufacturers of branded medicines currently pay a record 26.5% of their revenue back to the government, a rate which the British Generic Manufacturers Association (BGMA) recently warned could have ‘significant’ implications for medicines supply if it continues to rise.

In the consultation proposals, the DHSC that the proposed updates to the statutory scheme, which is also set to expire at the end of this year, ‘are independent from voluntary scheme negotiations, and do not prejudge the outcome of those negotiations’.

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A spokesperson for DHSC told The Pharmacist: 'We are consulting on changes on changes to the statutory scheme so that it can continue to keep the medicines bill at a price which is affordable for the taxpayer, while ensuring NHS patients can access the latest treatments.

'However, we remain firmly committed to agreeing a successor to the 2019 voluntary scheme for branded medicines pricing and access (VPAS) with industry.'

The consultation on the proposed changes will be open until October 2023.