NHS England has confirmed it is in the dark over how much money it has received from the rebates pharma has paid as part of the new Pharmaceutical Price Regulation Scheme, a Freedom of Information request for PharmaTimes Media has found. 

In addition, NHS England, the biggest beneficiary of monies allocated by the Department of Health, doesn’t know how any money will be spent.  

While the new PPRS – which came into force at the start of the year and includes an agreement whereby pharma will pay a rebate when NHS spend on branded medicines goes above agreed growth rates – does not specify where payments received by the DH will go, there has been much pressure that the money makes its way back to the local level and, indeed, it was hoped this would be the case.   

However, NHS England says in response to an FOI request that is in the dark in regards to the movements of the rebates, despite two payments already being made by the industry this year.  

The organisation states that it “does not hold [that] information” when it was asked how it has/would allocate PPRS payments. It goes on to say that: “Anticipated payments under the PPRS for 2014/15 were included in the budget allocated to NHS England…as such, this funding was included within commissioner allocations as part of their general funding, and no separate breakdown is produced.” 

That NHS England doesn’t know how much it has received was described as “astonishing” by one industry source.

To make matters worse, it seems the Department of Health is not monitoring the flow of monies either, as revealed in a separate FOI request directed to the DH. It said: “Company PPRS payments are treated as Department of Health income. The Scheme does not cover the flow of payments to NHS commissioners, which are subject to the Government’s normal accounting and budgeting rules.” 

Roughly translated, once the money has been allocated to NHS England, no one knows where it goes after that. 

This is somewhat concerning. Besides the fact the money is important in an NHS facing tough times, the monetary figure is not an inconsiderable amount – £150 million for Quarter 1 and Quarter 2 of 2014 alone, with estimates the rebate for the whole of this year could be as much as £400million.

Leslie Galloway, chair of the Ethical Medicines Industry Group (EMIG) suggested that the 2014 PPRS “reflects a lack of understanding of the NHS budget and flows of money. [PPRS payments are] a rebate to the Department of Health and budgets in the NHS are not hypothecated for drugs”. The result of this, he argued, is that, “companies are feeling the pain of the rebates, but not the gain in terms of any recognition by the NHS of their effective, and likely to be growing, price cut”.

David Watson, head of commercial at the ABPI said that “through the PPRS we have both a payment mechanism, and a series of commitments to uptake. The scheme is clear: payments reflect actual growth. In the short term we know that NHS England has received a sum from the DH, but we also recognise that it’s almost impossible to trace the money back down to individual commissioners.” He cited funding flows that were complicated and governed by strict rules, including prohibition of running deficits over financial years.

“The ABPI will be working through the life of the scheme with the health departments on ways in which payments can be reinvested in medicines use,” he added. 

There was an opportunity for the future, according to Watson. “The PPRS is a solution at the macro UK level. Unless we move to a national medicines budget, which would have pros and cons for industry, the alternative is to work with the NHS on uptake of innovative new medicines. We’re doing just that with our work on medicines optimisation and detailed discussions across a range of uptake issues. The PPRS is a framework for change and we have to work that framework fully.”

New medicines fund in Scotland

The contrast between England and Scotland couldn’t be starker. There £20million PPRS monies have been used to support a New Medicines Fund, replacing the Rare Conditions Medicines Fund, announced this month. This doubles the money that was previously available for medicines for rare conditions, while £40million will also be made available for 2015/16.

Galloway highlighted that “the structure of the NHS in Scotland is different, and because of size is less complex, which makes it easier for the Scottish Government to create a new medicines fund”.

Watson was keen to see “how NHS England responds” to the Scottish approach but would not want to see “all the [PPRS] money going to particular drugs, such as cancer drugs”.

Drug prices

The 2014 PPRS included expectations of growth in the NHS branded medicines bill. Early signs are that growth is higher than expected, with the DH pointing out that it had expected growth of 3.87% for the whole of 2014, but this has already grown by 5.5% over the first 6 months. The ABPI estimates PPRS payments could reach £4billion over the five-year agreement.

Galloway worried that, with the prospect of higher PPRS payments, “companies will be reluctant to start or continue with investment”.  Uncertainty “stifles innovation”, he said.

Watson pointed out that “we’re in a dynamic phase of spend on medicines. Gone are the days of big blockbusters, we still have products going off patent as well as Patient Access Schemes. It’s a very dynamic landscape”. Against that landscape, “the PPRS is actually the best deal at the moment to achieve an improved environment to deliver uptake of new medicines, in a climate of austerity,” he said. “The PPRS delivers many benefits beyond the austerity-driven rebate.”

Both Galloway and Watson mentioned that the alternative for companies to the PPRS, the Statutory Scheme for Branded Medicines, may well result in even higher price cuts. The Department of Health is already consulting on price cuts that would go further than the 15% seen last year, asking for views on up to a further 10% cut taking it up to 25%.