The new five-year deal struck between the UK government and the pharmaceutical industry is being announced this morning which will see drugmakers accept a rebate rate that will cut the cost of branded medicines to the National Health Service by 3.74% in 2014.

The Department of Health is unveiling the latest version of the voluntary Pharmaceutical Price Regulation Scheme (PPRS) following what the Association of the British Pharmaceutical Industry (ABPI) calls "the most complex negotiation we have ever had with the Government". The rebate rate will stay the same in 2015 and then rise in the last three years of the agreement by 1.8%, 1.8% and 1.9% respectively.

The industry will make payments to the Department of Health if NHS spending on branded medicines exceeds the allowed growth rate, while rules on pricing of new products will remain as now. Companies that do not sign up to the PPRS, ie those on the statutory scheme, face a compulsory price cut of 15%.

'Five years to fix access problem'

ABPI chief executive Stephen Whitehead said that "whilst the deal allows us to move forward and focus on the key issue of ensuring NHS patients get access to the medicines they need, the Government needs to recognise that medicines are an investment in patient care and not just a cost to be managed". He added that "we have agreed to play our part, recognising the financial challenges facing the NHS. We now need the Government and the NHS to respond positively to this unique opportunity", saying "we have five years to fix the access problem [and] address the long history of low patient usage of innovative medicines in the UK.
Mr Whitehead noted that "we need to recognise that this deal could have additional implications for smaller companies". He said that "whilst the Government has protected some exemptions for companies with up to £5m of NHS sales, we are disappointed that they have not been prepared to fund exemptions for companies with NHS sales between £5m and £25m. Companies in this category will find this extremely tough, and we need the Government to work to ensure the UK is attractive to smaller companies. ”

 Regarding the statutory scheme, Mr Whitehead said "we are extremely disappointed by the government price cut of 15% inflicted on the industry". He added that asking companies to contribute even more "at a time when the industry has already made huge savings is excessive and unnecessary".

VBP delay

In terms of value-based pricing, there were few concrete details disclosed. Alongside the PPRS, the National Institute for Health and Care Excellence (NICE) will continue its work, according to the DoH, "to introduce broader value assessment for new medicines covered by VBP…assessed according to a broader scope of value to patients and society, and not just on cost". This will now  be introduced in autumn 2014 following public consultation.

Mr Whitehead said "we hope that NICE will seize the opportunity to adopt the broader definition of value in order to lead the way in encouraging and endorsing the use of more innovative medicines. NICE needs to fully support the NHS in making innovative medicines rapidly available".