Renewing the UK Voluntary Pricing Scheme

The United Kingdom (UK) 2019 Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) will end on 31 Dec. 2023. The UK’s 2019 VPAS succeeded several Pharmaceutical Price Regulation Schemes (PPRS) stemming back to 1957, and negotiations for the new VPAS between the UK government, National Health Service (NHS) England, and the Association of the British Pharmaceutical Industry (ABPI) began in May 2023 (1). The VPAS is one of two schemes, alongside the statutory scheme, that control the prices of branded medicines to the NHS (2).

The new VPAS will take effect from 1 Jan. 2024, and although profit control remains at the centre of the negotiations, the spotlight will be focused on keeping branded drugs affordable. The 2019 VPAs established a rise of 2% per annum from 2018–2023 for branded medicines, but historically, the spending on branded medicine has always exceeded the allowable growth rate (3). The ABPI notes that since 2021, the VPAS rebate resulted in member companies paying around 5% of their revenue back to the NHS and this increased to 15% in 2022 and 26.5% in 2023. It points out that the 2019 VPAS is no longer fit for purpose and needs to be overhauled (4).

On 20 Nov. 2023, a new deal was agreed between the UK government, NHS England, and the pharma industry which should save the NHS £14 billion over five years in medicines costs (5). The 2024 VPAS has reset the annual allowed growth in sales of branded medicines from 2% in 2024, rising to 4% by 2027. All older medicines that have not previously had price reductions will pay a top-up rate of up to 25% plus a base rate of 10% and the top-up will taper down for older medicines that have already been subject to price reductions (5).

ABPI proposes a new framework

Two Big Pharma companies, Eli Lilly and AbbVie, have already pulled out of the current VPAS voluntary pricing scheme (5), and Leslie Galloway, chair of the Ethical Medicines Industry Group (EMIG), warned “a survey showed that 50% of its members were reducing supplies of medicines in 2023 and a further 40% were discussing a reduction” (6). Thus, the 2024 VPAS needed to carefully balance affordability and allowable growth in order for the UK government to meet its goals of promoting better patient outcomes and a healthier population, supporting UK economic growth, and contributing to a financially sustainable NHS (Figure 1) (1).

According to Richard Torbett, chief executive at the ABPI, “This is a tough deal which underlines the essential role innovative medicines and vaccines will play in addressing the health challenges of the future. The industry supports this agreement, despite its restrictions, as it provides important support for patients and the NHS and commits to giving them access to the transformative treatments they need,” (5).

Under the new agreement, the pharmaceutical industry will also invest £400 million over five years through the Life Sciences Investment Programme to drive forward UK innovation, sustainability, and growth. The programme will be ring fenced to support work in:

• pioneering clinical trials to bolster the NHS’s capacity to deliver commercial clinical research.
• manufacturing helping to position the UK at the forefront of sustainable manufacturing by driving innovative advancements in environmental technologies and cultivating strategic partnerships.
• innovative health technology assessments (HTAs) to support access to innovative medicines by developing novel approaches to HTA challenges (5).

The UK Generics and Biosimilar Medicines (BGMA) is concerned that its interests have not been fully considered and wanted more involvement in the VPAS negotiations (7). Disturbingly, some branded generic companies have already withdrawn products from the UK market as the operating environment was unviable (8). A new report shared with The Independent indicates that post-Brexit red tape is leading to a significantly higher risk of drug shortages in the UK, in part due to the UK’s ability to acquire and stockpile medicines but also because of non-tariff issues and the difficult economic environment (9).

According to Mark Samuels, chief executive of the BGMA, “we are very disappointed that the price erosion mechanism (PEM) appears to damage competition because of how the reference price is calculated; it will reduce the plurality of medicine suppliers for the NHS, increasing the drug shortage risk … We are also concerned by the scheme using an originator product’s SPC status to confer whether a generic or biosimilar medicine that launches is defined as a new or older product,” (10).

Stakeholder engagement is essential

The involvement of NHS England in negotiating medicine pricing and access has increased over recent years particularly, given its role in tendering as the Commercial Medicine Unit was brought in-house and it is the gatekeeper for Patient Access Schemes (PAPs) (11). The new agreement details how NHS England will work with companies to create a new PSP database to encourage local NHS services to partner with manufacturers and encourage the wider use of novel approaches to patient support post treatment (5).

This is one of the biggest economic and political debates that will have a significant impact on NHS patient access to cutting-edge treatments, the financial sustainability of the health service, and the competitiveness of the UK life science sector over the next five years. Although the BGMA is calling for further clarification regarding the reference pricing calculation for generics and biosimilars the new deal appears to be have been well-received by the pharma industry, and the new affordability mechanism for older medicines promises to support lower payment rates for more innovative branded medicines (5). Overall, the 2024 VPAS should allow the life science sector to grow faster than under the previous schemes and strengthen the UK’s global competitiveness.

References

1. UK Gov. Negotiations Begin for a New Medicine Pricing Scheme. Gov.uk, Press Release, 4 May 2023.
2. UK Gov. Consultation Outcome Proposed Update to the 2023 Statutory Scheme to Control the Costs of Branded Health Service Medicines. Gov.uk, Consultation Outcome, Updated 2 March 2023.
3. ABPI. Voluntary Scheme on Branded Medicines. ABPI.org.uk (accessed Nov. 2023).
4. ABPI. At the Crossroads: How a New UK Medicines Deal can Deliver for Patients, the NHS, and the Economy. ABPI.org.uk, Proposal Paper, March 2023.
5. ABPI. Landmark Medicines Deal to Boost Nation’s Health, Save NHS £14 Billion, and Support Research Investment. ABPI.org.uk, New Release, 20 Nov. 2023.
6. Gershlick, P. Two Big Pharma Companies Leave NHS Pricing Scheme over Punitive VPAS Rebates. VWV.co.uk, Pharma Blog, 17 Jan. 2023.
7. Gershlick, P. 90% of Branded Pharma Could Reduce UK Medicines Supply in 2023. VWV.co.uk, Pharma Blog, 6 Dec. 2023.
8. Gershlick, P. BGMA Seeks Judicial Review to be Involved in New VPAS Negotiations Alongside ABPI. VWV.co.uk, Pharma Blog, 4 May 2023.
9. Gershlick, P. Crippling VPAS Rebate Scheme Killing Availability of Cheaper Generic Medicines. VWV.co.uk, Pharma Blog, 31 Oct. 2023.
10. BGMA. VPAG Heads of Agreement Reaction. BritishGenerics.co.uk, News Release, 21 Nov. 2023.
11. Forrest, A.; Thomas, R. NHS Patients Hit by ‘Severe Drug Shortages’ due to Brexit Red Tape. The Independent, 5 Nov. 2023.

About the author

Cheryl Barton is director at PharmaVision, Pharmavision.co.uk.

Article details

Pharmaceutical Technology Europe
Vol. 35, No. 12
December 2023
Pages: 7–8

Citation

When referring to this article, please cite it as Barton, C. Renewing the UK Voluntary Pricing Scheme. Pharmaceutical Technology Europe, 2023, 35 (12), 7–8.