The Department of Health and the Association of the British Pharmaceutical Industry (ABPI) have announced the first payment made by industry, totaling £74 million, to underwrite the growth in the branded medicines bill under the 2014 Pharmaceutical Price Regulation Scheme (PPRS).

This payment accounts for the first three months of 2014. The first-year payments have been agreed at 3.74% of companies’ net sales, which is based on a joint forecast of growth in the branded medicines bill. In subsequent years the payments will be adjusted based on actual growth rates.

Under the scheme, the amount spent by the NHS on the branded medicines controlled by the PPRS will remain flat for two years, followed by increases of less than 2% in the following three years. The industry will make payments to the Department if NHS spending on branded medicines exceeds the allowed growth rate.

Excluded from the arrangements are exceptional central procurements, such as national stockpiles for national security or pandemic preparation. Also excluded are procurements of centrally-supplied vaccines, parallel imports and companies with sales of less than £5 million in the previous year.

Commenting on the first payment, ABPI chief executive Stephen Whitehead said that it is “proof that the PPRS is working as it was designed to, and is a strong foundation to achieve better access to innovative medicines for patients across the country.”

“The ABPI is currently in discussions with both the Department of Health and NHS England on how best to ensure that the Scheme delivers better access to innovative medicines for patients, and we are committed to working with the NHS to achieve this,” he said.

The Department points out that as only one quarter’s data is available so far for 2014, it is not yet possible to calculate the adjusted payment percentage for 2015. The payment percentage for 2015 will be published in the autumn and will be based on the growth in sales between quarters 1-3 for financial years 2013-14 and 2012-13, it adds.