New UK government plans to sharply increase rebates from pharma medicines sales have been roundly criticised by the industry.
Yesterday saw the government unveil its plans for an updated Statutory Scheme, a ‘back up’ plan for companies not in the main PPRS pricing system.
Companies using the statutory scheme must currently pay charges of 7.8% of their UK revenues (effectively a rebate) but the government now proposes that this rises sharply: up to 9.9% in 2019 and up again to 15.8% in 2020 and finally reaching 21.7% in 2021.
The ABPI’s Dr Richard Torbett
Dr Richard Torbett, Executive Director of Commercial Policy at the ABPI said: “The figures proposed in the statutory scheme consultation are concerning and will undoubtedly send an alarming signal to an industry that is working hard to secure a future in the UK post Brexit.
“Such punitive measures are unjustified due to the systems already in place which help the NHS to buy medicines at some of the lowest prices in the developed world. The ABPI will be responding to the statutory scheme in due course.”
Any souring in relations with the government on the statutory scheme would be bad news, as the two sides are also currently negotiating a replacement for the ‘voluntary’ PPRS agreement, in which talks must also conclude by the end of this year.
Dr Torbett concluded: “We are committed to working with the government on a new voluntary scheme which maximises patient access to medicines in a way that is affordable to the NHS and which also supports the industry’s ability to keep investing in new medical research here in the UK.”
For its part, the UK government has prioritised the sector as a key industry post-Brexit through its life sciences industrial strategy, but industry insiders say this has to be backed up by money for new medicines spending.
Biosimilars also squeezed
The consultation also contain plans to bring biosimilar products into the statutory scheme – an idea similarly vehemently opposed by representatives of the sector.
“It makes no sense for the government to intervene in pricing when competition or tenders already very effectively control prices of branded generics and biosimilars,” said Warwick Smith, Director General of the BGMA and the British Biosimilars Association (BBA).
The government report says biosimilars haven’t produced the same level of price reductions seen when generics of small molecule drugs reach the market – an argument rejected by Warwick Smith.
“In particular, the consultation appears significantly to underestimate the savings already delivered by biosimilars where we have seen price reductions of more than 80% for some products. It is therefore wrong to include products which are subject to competition via tendering in the statutory scheme or the PPRS and also apply an additional rebate of up to 25%.”
Warwick Smith went as far as to say the proposals might deter some companies from launching biosimilars in the UK at all. NHS England’s chief executive Simon Stevens last year set a target of £300m in savings from biosimilars in the next three years – led by cheaper versions of drugs such as Herceptin, MabThera and Humira – but Warwick Smith says the new plan puts this target in jeopardy.
The new proposals are now open to consultation until Friday 7 September, with the government aiming to introduce the new regime from force 1 January, 2019, alongside a new PPRS (or equivalent) agreement.
This gives the industry some time to argue its case, though the Department of Health and Social Care (DHSC) and NHS England remain constrained by tight budgets, despite a recent increased funding pledge of £20bn.