UK government outlines new plans to control cost of branded medicines to the NHS

Out-Law News | 25 Aug 2017 | 1:01 pm | 2 min. read

New legislation has been proposed by the UK government to regulate the price of branded medicines supplied to the NHS.

The proposed reforms seek to update the current statutory price control mechanism, which regulates the cost of branded pharmaceuticals to the NHS for companies that do not otherwise participate in the voluntary Pharmaceutical Price Regulation Scheme (PPRS).

The draft Branded Health Service Medicines (Costs) Regulations 2018 (30-page / 461KB PDF), are aimed at bringing the statutory scheme into closer alignment with the PPRS and, ultimately, delivering savings to the NHS on what it spends on buying branded medicines, said Catherine Drew, an expert in the regulation of life sciences companies at Pinsent Masons, the law firm behind Out-Law.com.

The proposed new regulations have been published alongside a consultation paper (52-page / 652KB PDF) and impact assessment (22-page / 746KB PDF) containing further details of the plans.

The government's proposals follow on from a consultation it held on changes to the statutory scheme in 2015, which led to it pledging to change the law to introduce a new payment mechanism for the supply of branded medicines to the NHS last year. At the time the Department of Health (DoH) said that there was a disparity between the savings NHS bodies could make by procuring branded medicines through the statutory scheme compared to under the PPRS.

The DoH said: "One of the aims and benefits of the voluntary scheme is to provide stability and predictability to the government and pharmaceutical industry. However, if the statutory alternative offers a very different commercial proposition and makes significantly lower savings in relative terms, as is the case now, the result is that there is inequity between the financial impacts of the two schemes. This also means the NHS loses out on the level of savings anticipated in the PPRS agreement."

Under the new proposals, companies subject to the statutory scheme would be obliged to make a payment to the DoH of a percentage of their sales of branded health service medicines, which the government would reinvest in the NHS. The sale of over-the-counter medicines prescribed by NHS doctors is excluded from the payment mechanism proposals.

The draft regulations also set out how the maximum price at which branded medicines can be sold to the NHS would be determined, as well as the process that companies would need to follow to apply for price increases. It also provides government ministers with powers to decrease prices in certain circumstances.

Further reforms to the sales information that manufacturers of branded medicines are required to record and provide to the government are also set out.

The government has also opened a separate consultation (50-page / 619KB PDF) on plans to force manufacturers, importers and wholesalers to record and provide sales data on the unbranded generic medicines and other "special medicinal products" that are supplied to the NHS.

The government would also have further powers to request cost information about those products, and the companies could also be required to provide information on the "available volumes and prices of generic medicines and special medicinal products" within 24 hours.