According to the Department of Health, the Consultation on Changes to the Statutory Scheme to Control the Prices of Branded Health Service Medicines aims to ensure that the cost of branded medicines to the NHS stays within affordable limits and that savings from the statutory scheme are aligned with those from the PPRS. The suggested options are:

Option 1: A further cut in the maximum price of presentations on sale for health service purposes on December 1, 2013 of between 20% and 30%.

Option 1a: As Option 1, plus a similar cut in the maximum price on September 1, 2015 of presentations introduced for sale for health service purposes after December 1, 2013.

Option 2: Replace the current 15% price cut on presentations on sale for health service purposes on December 1, 2013 with a payment by companies against sales of such presentations, after first deducting discounts and VAT. The suggested payment percentage ranges between 10% and 17%.

Option 2a: As Option 2, and also require a payment by companies against sales of new presentations on sale for health service purposes after  December 1, 2013, after first deducting discounts and VAT. The suggested payment percentage ranges between 10% and 17%.

The DH believes that the statutory scheme produces lower savings relative to the health service sales covered by the scheme than the PPRS and the gap is expected to widen. Realignment is said to promote a more level playing field between companies in the two schemes and encourage companies to remain in the  PPRS.

Under the current PPRS agreement, the pharmaceutical industry has agreed to keep NHS expenditure on branded medicines flat for two years and under 2% growth for the following three years. Companies will make percentage payments based on any difference between allowed growth and actual growth in sales. Recently, pharma industry representatives, the Association of the British Pharmaceutical Industry announced a payment of £209 million from industry to underwrite growth of the medicines bill for the second quarter of 2015 under the 2014 Pharmaceutical Price Regulation Scheme (PPRS). Over the life of the scheme, industry is expected to pay £4 billion to the Government, it says.

David Watson, director of pricing and reimbursement at the ABPI said: “We are concerned that this consultation sends out further negative signals globally about the UK’s willingness to pay for new and innovative medicines for patients. Moreover, given that the last consultation on this scheme took place less than one year ago, we are concerned that further changes to the scheme may create uncertainty in the UK pharmaceutical market.”

The PPRS is a voluntary scheme that aims to ensure that medicines are available on terms that are reasonable to the NHS and which maintain a strong, efficient and profitable pharmaceutical industry. Some 93% of the UK, branded industry are members of the PPRS, which was agreed in November 2013. Any company not in membership of the PPRS is automatically subject to the statutory scheme. The current statutory scheme imposes a list price cut of 15% on products and companies.

Comments can be emailed before the consultation closes on December 4, 2015