The UK’s new five-year pricing agreement

The UK has a new five-year Voluntary Pricing and Access Scheme (VPAS) for branded medicines, which came into force on 1 January 2019.

The deal, which replaces the long-standing PPRS agreement, includes a cap of 2% growth on the total medicines bill for each year of the agreement, with any NHS spending over this limit being repaid by the industry.

This is a little higher than the 1.1% rate the medicines bill growth rate has been kept to over the past five years – but much lower than the overall NHS spending growth rate.

The government estimates this will result in £930m in savings. However it says new measures to speed-up decision-making on new medicines mean they could reach patients up to six months earlier than at present. This low rate of growth, combined with new price controls introduced by NHS England on new innovative medicines, means the pharma sector isn’t jumping for joy over the deal. Nevertheless, it provides some stability and predictability for the UK sector, where the uncertainties of Brexit continue to threaten the overall attractiveness of the UK market.

Industry leaders who have voiced their support for the deal include Novartis’ UK country president Haseeb Ahmad and EMIG’s chairman Leslie Galloway, who says the ABPI’s negotiating team had to battle against the government plan to set the growth rate even lower (read Leslie’s commentary here).

Haseeb Ahmad, UK country president, Novartis

The industry has secured assurances that new medicines will benefit from fast-tracking from NICE, and that NHS England will also promote faster uptake – examples of this include recent deals on CAR-T therapies, plus a new expansion in the use of Keytruda in lung cancer, announced late last year. There are new ‘greater flexibilities’ in the deal aimed at helping small and medium-sized pharma companies, including reintroducing ‘the taper’ on rebate payments to reflect the different revenue levels across the sector, which is welcome news for these firms.

Mike Thompson, Chief Executive of the ABPI, said: “This agreement is a commitment by the government and the NHS to work with us to support innovation for the benefit of patients. This means that people across the UK should see better and faster access to the most effective new medicines and vaccines.”

Mike Thompson, chief executive, ABPI

Having agreed a ceiling on growth, the question of speed of market access for novel treatments will undoubtedly be the key metric preoccupying UK industry leaders over the next five years.

The Department of Health and Social Care (DHSC) overview

The affordability mechanism

• Industry agrees to contribute to NHS financial sustainability through an overall cap on growth on NHS-branded medicines sales at a nominal rate of 2% per year, with member companies making payments based on net sales
• A new cap mechanism to improve ‘stability’, which takes into account overall branded medicine sales across the voluntary and statutory schemes and parallel imports, although scheme members only pay for the voluntary scheme share
• Support for innovation through a rolling 36-month exemption from payments for new active substances and a significantly improved exemption for smaller companies
• The payment rate for 2019 is set at 9.6%, with subsequent years’ payments to be determined by actual sales growth.

Uptake, access and outcomes

• NHS England to provide more proactive uptake support and implementation planning for innovative, cost-effective medicines that provide a significant health gain, including committing to the objective of reaching the upper quartile of uptake for the five highest health gain categories
• Government, the NHS and industry to continue developing data infrastructure, including developing the ‘innovation scorecard’.

Value assessment

• More and faster NICE appraisals for new medicines including speeding up the appraisal of non-cancer medicines to be in line with cancer medicine appraisals – cost-effective new medicines will be available faster for patients and come with guaranteed funding
• NICE basic cost-effectiveness threshold to be retained at the current range (£20,000 £30,000 per quality-adjusted life year) for the duration of the voluntary scheme
• NICE committed to scoping and, where appropriate, initiating a review of technology appraisal methods.

Commercial arrangements

• Opportunities for greater commercial flexibility for those companies that offer the best value new medicines, negotiated with NHS England. NHS England, with input from NICE and ABPI, committed to develop and publish a ‘commercial framework’, which will set out further operational detail once the voluntary scheme is in place
• Confidential sharing of commercial arrangements across the UK, with all four countries to reduce duplication and work towards comparable commercial arrangements.

Routes to market

• A single, shared approach to horizon- scanning to support better financial and service planning
• Opportunity for companies to engage earlier with the NHS or government through a single route, including case management where appropriate.

Scheme operation

• Continued support for innovative medicines in the first three years post-licensing, including freedom of list pricing for new active substances and immediate line extensions
• Reduced bureaucracy for companies, with routine annual financial reviews (AFRs) no longer being required other than to support applications for price increases, and offering the option of a one-off settlement for historic cash payments
• Discontinuation of modulation, although existing modulated prices can remain
• Price increases will continue to need approval from DHSC, with a new provision for price increase approvals if there is evidence that a medicine is no longer economic to supply and where discontinuation would have a negative impact on patient health.

Read the full 2019 Voluntary Scheme for Branded Medicines Pricing and Access document here