UNITED KINGDOM — In what was hailed as a “landmark” deal between pharmaceutical companies and the U.K. government, the Association of the British Pharmaceutical Industry (ABPI) continues to apply pressure for more industry-friendly spending policies.
The recently introduced Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG) aims to save the NHS £14 billion (US$17.5 billion) over five years, fostering easier access to new treatments.
VPAG, a successor to its predecessor, sets an annual cap on the total sales value of branded medicines to the NHS, with excess sales subject to a levy.
Running from the end of 2023 to December 31, 2028, the scheme notably doubles the allowed growth in sales of branded medicines annually, reaching 4% by 2027.
It also introduces a mechanism supporting lower industry payment rates for innovative branded medicines.
Under the new terms, branded drug companies opting into the statutory scheme will pay rebates amounting to 21.9% of sales in 2024, 24% in 2025, and 26.8% in 2026.
While these rebates represent a reduction from the 27.5% demanded in 2023, the ABPI asserts they are still damaging the U.K.’s international standing in the life science sector, especially considering the historical average of 10.6%.
The coexistence of voluntary and statutory schemes governs drug costs under England’s National Health Service (NHS), requiring branded drugmakers to choose one.
Despite the industry’s celebration of the voluntary deal, the ABPI continues to express concerns about the terms of the statutory scheme.
Richard Torbett, Ph.D., head of ABPI, previously lauded the voluntary scheme for its potential to enhance the U.K.’s international competitiveness.
However, he now notes that the statutory terms send a confusing message to global life science investors.
The cap imposed by the policy on the U.K. drug market’s natural growth level, according to Torbett, undermines the country’s standing among biopharma investors.
The U.K. government, seeking input on the statutory scheme between July 18 and Oct. 10, abandoned the proposed “Life Cycle Adjustment.”
This mechanism aimed to impose higher rebates on older drugs and those in less competitive markets, a move deemed unworkable by the ABPI.
The government insists on making the statutory scheme “broadly commercially equivalent” to the voluntary one and plans to consult again in early 2024, considering the updated voluntary deal.
ABPI’s Torbett emphasizes the government’s commitment to supporting the international competitiveness of the U.K.-based life sciences industry.
He urges the forthcoming consultation to unlock constraints on growth, fostering a more conducive environment for inward investment.