The UK government has now put its plans to introduce value-based pricing (VBP) for medicines supplied through the NHS from 2014 outfor consultation.

VBP "will ensure that the price the NHS pays for medicines are based on an assessment of its value, looking at the benefits for the patient, unmet need, therapeutic innovation and benefit to society as a whole," Health Secretary Andrew Lansley said yesterday as he announced the consultation, which will run to March 17.

The VBP system will replace the Pharmaceutical Price Regulation Scheme (PPRS) when it expires at the end of 2013, and apply to New Active Substances (NAS) placed on the market from January 1, 2014, according to the consultation document setting out the government’s plans.  Subject to discussion with industry, some existing medicines could be included within the system, it says; generics are not expected to be included.

For branded medicines already covered by the PPRS at the end of 2013, a successor scheme will be developed.

Discussing the case for change, the document notes that, while the PPRS has provided “some” stability over time, it does not sufficiently promote innovation or access. “In particular, freedom of pricing for new drugs puts the NHS in the position of either having to pay high prices that are not always justified by the benefits of a new drug or having to restrict access,” it says and, while initiatives such as patient access schemes (PAS) and the Cancer Drugs Fund have helped, these are not long-term solutions.

Pharmaceutical companies need a pricing system that is more stable, transparent and gives clear signals about priority areas so that research efforts are directed to maximum effect, while a better way is also needed for dealing with new drugs whose benefits are more limited, it adds. “For example, product line extensions, which are comparable to, or offer only small benefits over existing treatments may not add much for patients. The NHS should not have to choose between paying over the odds or restricting access,” the document says.

The key principle of VBP is to ensure that NHS funds are used to gain the greatest possible value for patients; therefore, the government is proposing a range of thresholds or maximum prices reflecting the different values that medicines offer. Its proposed price threshold structure would be determined thus: a basic threshold, reflecting the benefits displaced elsewhere in the NHS when funds are allocated to new medicines, plus higher thresholds for:
- medicines that tackle diseases where there is greater “burden of illness” - the more the product is focused on diseases with unmet need or which are particularly severe, the higher the threshold;
- products that can demonstrate greater therapeutic innovation and improvements compared with other products; and
- medicines that can demonstrate wider societal benefits.

Turning to the role of the National Institute for Health and Clinical Excellence (NICE) under the new system, the document says that “there is no scope for NICE in England, or its parallel bodies in the rest of the UK, to enter into pricing negotiations or to recommend an NHS price.”

NICE is a world leader in pharmacoeconomic evaluation of drugs and a centre of excellence, it says, and points to the “significant future expansion” of the Institute’s work, as set out in the NHS White Paper, on the development of quality standards for health and social care, along with tools and guidance to support commissioners in delivering them.

“Subject to parliamentary approval, NICE itself will be re-established in the forthcoming Health and Social Care Bill, to guarantee its status and ensure it is fit for purpose,” it says.

The consultation was welcomed by Dr Richard Barker, director general of the Association of the British Pharmaceutical Industry (ABPI), who said he looked forward to representing the industry in co-creating the new system with the government.

Dr Barker agreed that the priority in any new system must be rapid and consistent patient access to new medicines – “value is meaningless without consistent access,” he said.

Also, innovation and investment in R&D must be fairly recognised and rewarded, he said, pointing out that UK continues to lag behind Europe in the uptake of innovative medicines despite having amongst the lowest prices, “so price alone is clearly not the main driver of access in the NHS.”

Nevertheless, pharmaceutical companies agree “fully that the government and the NHS should seek value for money from medicines, and expect NICE to continue to play a key part in the process. Our industry must demonstrate the full value of its medicines, it is for government to put in place processes which assess that full value, and then secure access to that value for NHS patients,” said Dr Barker.