The responses from industry associations, patient groups and other interested parties have been flooding in following the announcement of the latest version of Pharmaceutical Price Regulation Scheme.

In basic terms, the five-year agreement will see NHS spending on branded drugs remain flat for two years, followed by increases of less than 2% in the following three years. Value-based pricing appears to have been put on the back burner, and most of the responses to the new scheme have been less than positive, particularly in terms of its effects on smaller companies.

Leslie Galloway, chairman of the Ethical Medicines Industry Group, the biopharmaceutical trade body for over 200 small and medium-sized enterprises, said that the new terms of the PPRS "will sadly adversely affect the ability of biopharmaceutical SMEs to invest and further innovate". He added that "this will be costly to patients [and] we urge the government to work with us to guard against unintended consequences of the new pricing legislation".

Over at the BioIndustry Association, chief executive Steve Bates said "it is vital new medicines are launched in Britain as a first location around the globe [as] this enables UK clinicians to remain global opinion leaders amongst their peers which encourages further R&D in the UK as a virtuous circle". He added that "if we lose this global pole position it will be hard to regain".

Mr Bates went on to say that the exemption of new products launched after January 1 2014 from payments under the new PPRS scheme "offers scant consolation for companies, particularly when balanced against the changes to the scheme for smaller companies that will make the UK a less attractive destination for global companies wanting to set up a European headquarters".

As for patient groups, Eric Low, chief executive of Myeloma UK, said his organisation welcomes "the focus on getting the balance right between budgetary constraint, value and access to new medicines, as well as continuing to enable a thriving life sciences environment". However, he added that "when the PPRS is renegotiated in the future we strongly believe that the voices of patient representatives and the public must be heard, as an integral, and crucial, part of this process".

One of the key elements to the scheme was that a VBP element, involving the National Institute for Health and Care Excellence's assessments of the cost-effectiveness of drugs for NHS use, is somewhat up in the air. NICE will continue to introduce "broader value assessment for new medicines covered by VBP" but this will now be introduced in autumn 2014 following public consultation.

NICE said that its board will be asked in the New Year to approve the interim value assessment methods, which will then go out for consultation in the spring with implementation in the autumn. It stressed to PharmaTimes that VBP will still go ahead but has "evolved into value assessment, which will happen".