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Changes to branded medicines pricing law will save £33m, says DHSC

13 Mar 2018

Changing the law around branded medicines pricing will produce £33m of NHS savings, the Department of Health and Social Care (DHSC) has estimated.

The DHSC and pharmaceutical industry body the Association of the British Pharmaceutical Industry (ABPI) agreed to ensure branded medicines prices remaining within affordable limits by revising a statutory pricing scheme from 1 April. The amendment will result in £33m of savings in one year, they estimated.

In the UK, branded medicine costs are determined either by a voluntary scheme that manufacturers can opt into, the Pharmaceutical Price Regulation Scheme (PPRS) – an agreement between the DHSC and the ABPI – or a statutory framework for companies that have not joined the PPRS.

Differences between schemes

Under the PPRS, branded medicine costs are capped, with companies making payments to the DHSC to cover spending above an agreed growth level.

Within the statutory scheme, companies are required to apply a 15% reduction to their maximum branded medicines selling prices.

The Government plans to replace the current price-cut mechanism with a payment system where companies that have opted in the statutory scheme will pay 7.8% of their net NHS sales to the DHSC. The changes will also limit the maximum price that a company may charge for the supply of those medicines.

‘Not limiting NHS spend’

The Government argued that as most products have actual selling prices below the 15% reduction, ‘the statutory scheme has no effect on the companies’ sales revenue’.

It hopes that changes to the scheme will not only save money but also enable the provision of additional treatments and services and improve patient health.

The regulations will apply to the whole of the UK, as ‘not commencing the provision UK-wide would introduce substantial burdens on companies and further delay would lead to fewer savings being made by health services across the UK’, according to Health minister Lord James Richard O’Shaughnessy.

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