DH PRICE CONTROLS
Implications for the Future Pricing
and Supply of Branded Medicines
within NHS Hospitals
Overview of the PPRS.
• A Voluntary Scheme which has gradually evolved over a lifetime of
some 50 years.
• Generally regarded as having been a series of stable and flexible
schemes associated with flexibility and a low bureaucratic burden.
• Based on price and profit controls.
• Allows freedom of pricing for New Active Substances and rapid
access to the NHS Market.
• Has provided a framework for the inclusion of such new ideas as
Patient Access Schemes.
A More Detailed View
The current Pharmaceutical Price Regulation Scheme is a voluntary Scheme agreed
between the Department of Health and the branded pharmaceutical industry
represented by the Association of the British Pharmaceutical Industry (ABPI).
The PPRS is the mechanism which DH uses to control the prices of NHS branded
medicines by regulating the profit that member companies of this Scheme can
make on their NHS sales.
The current PPRS came into operation with effect from 1st January 2009 to operate
for not less than five years after that date with the condition that either DH or the
ABPI may request termination or renegotiation of the scheme after four years
DH gave notice that at the end of 2013 the 2009 scheme would terminate and
negotiations between DH and ABPI have been ongoing for some considerable
time opened for a new scheme. Negotiations are unlikely to be concluded before
November. No announcements were made by either the ABPI or DH concerning
any amendments until yesterday Wednesday 6th November.
Regulations associated with the PPRS
• The Health Service Branded Medicines (Control of
Prices and Supply of Information) (No. 2)
Regulations 2013 were proposed to come into
force in October 2013. They did not.
• The Regulations should form the statutory
alternative to the voluntary arrangements. In
other words they should not apply to
manufacturers which are members of the
voluntary PPRS
Shocks to the PPRS
Why is this all happening?
• An OFT review on 2007 that recommended Value Based Pricing.
• A High Court Case brought by GSK concerning the contractual nature of
the PPRS.
• A series of Dispute Resolution Hearings concerning differing
interpretations of the meaning of the Scheme , including whether it is a
formal contract.
• The determination of whether PPRS price cuts and modulations actually
delivered the savings required by the PPRS.
• The introduction by Regulations of an option to fall under Regulatory price
control arrangements, rather than continue voluntary membership of the
PPRS
Future Arrangements.
What might we expect?
• A new flagship PPRS .
• Amended Statutory Regulations.
• Value Based Pricing.
• An overall cap to the cost of NHS branded
medicines.
Possible PPRS changes affecting the
cost of NHS branded medicines
• Yet another (list) Price Cut? But apparently not!!
• Clawing back of savings not delivered by PPRS members
under previous schemes. If so where will the money go?
• Profit controls: more or less?
• An overarching cap on the cost of total expenditure on NHS
branded medicines?
• Shoehorning Value Based Pricing into the PPRS
framework?
Price Cuts under the new regulations?
These might include:
• Introducing a new price cut which may or may
not be the same as the percentage price cut
under the new PPRS. But some surprising news
was issued yesterday!
• Establishing revised reference prices for the
purpose of a price cut either based on NHS list
prices or based on Average Selling Prices within
hospitals.
Some Implications for Hospital Pricing
and Supply
• Contracts will continue to be the key means of controlling
expenditure on NHS branded medicines.
• Price Cuts might lead to increased parallel exports and
further shortages of NHS medicines.
• There will be a greater administrative burden on all
involved to calculate the total costs of NHS medicines .
• It cannot be assumed that any claw back of excess
expenditure will be channelled back to budget holders.
The Impact of Value Based Pricing
This is uncertain insofar as the new arrangements will have to deal with new and
interactive mechanisms dealing with such aspects as:
•
Burden of illness, QUALYS, other value elements and weightings.
•
Engagement of many stakeholders: NICE, MRC, Academics, GP Consortia , Patient
Groups and Hospital specialists.
•
A bureaucratic burden considerably greater than current arrangements.
•
Coverage of Orphan drugs
•
Impact on the Cancer Fund
•
VBP appears to have the potential to delay access to or uptake of new or
innovative medicines.
NEWS!!!
Key announcements issued on 6th November:
•
15% list price Cut under the Regulations.
•
PPRS members to make payments to DH
based forecast and actual “rates of
measured spend”. The initial payment will
be 3.74% of net sales.
•
Some exemptions for small companies
•
Companies have an option to request a
Value Based Price appraisal.
REVISIONS TO THE REGULATIONS
• 15% list price cut for those companies which are not
members of the PPRS
• Small companies with annual sales of less than £5M
exempt will be exempt from price cut and provision of
information.
• The introduction of Average Selling Price calculations
will be delayed for an unspecified period of time.
• The low cost presentation exclusion of less than £450K
removed- if companies need a price increase then they
can apply for one (but there are no details clarifying
how a price increase may be calculated.)
REVISIONS TO THE PPRS
•
The NHS branded medicines bill will stay flat over next two years .
•
However, there will be no price cuts and control over the cost of NHS branded medicines will be
achieved by industry making payment to DH if spending exceeds “ the allowed growth rate”
•
The percentage forecast growth rate of measured spend for each year of the PPRS will be:
3.87 %– 3.52% – 3.86% – 2.14% -3.09%
The allowable percentage forecast growth rate of measured spend for each year of the PPRS will be:
0.00% - 0.00%- 1.80%- 1.80% - 1.90%
•
An initial amount will be payable in 2014 based on estimated net sales in 2014 of 3.74%
•
Estimated annual percentage payments for each year thereafter will be :
7.13% – 9.92% - 9.92% – 9.92%
•
Small companies with sales of branded medicines less than £5M will be exempt from making the above
payments.
•
DH has not explained how or whether the above payments will be channelled back to budget holders!
OTHER ISSUES
• Patient Access Schemes will continue with
some tweaks.
• Value Based Pricing has been kicked into the
long grass: essentially up to NICE with an
elective option for companies.
• A broader definition of Value will be
introduced in due course.
• Treatment of Homecare sales unresolved
Manufacture Rebates
• “With the exemption of Patient Access
Schemes, NHS England will seek to bring to an
end initiatives by NHS commissionaires (NHS
England or CCGs) to arrange for rebates to be
made by manufacturers to the Commissioning
body for the supply of medicines with a
positive NICE technology appraisal to
providers of NHS services in primary or
secondary care” !!!
The Same old Same old?
• The PPRS will continue to provide an overarching
framework for the negotiation of various pricing and
control policies and mechanisms.
• Mainly driven by a few large companies and representative
organisations who have experience in influencing DH policy.
• No effective engagement with Hospitals or any other
budget holders.
• No clarity about the extent to which the new arrangements
will impact on budget holders throughout the NHS.
Thank you
• Thank you
• Good night
• And good luck!