Decades old PPRS name to go.
The deal, which is still to be finalised, includes a cap of 2% growth on the total medicines bill for each year of the agreement, with any NHS spending over this limit being repaid by the industry.
This is a little higher than the 1.1% rate the medicines bill growth rate has been kept to over the past five years – but much lower than the overall NHS spending growth rate.
The government estimates this will result in £930m in savings next year. However it says new measures to speed up decision-making on new medicines means they could reach patients up to six month earlier than at present.
This low rate of growth, combined with new price controls introduced by NHS England on new innovative medicines means the pharma sector won’t be overly pleased with the deal – particularly as Brexit continues to threaten the overall attractiveness of the UK market.
In particular, a number of the sector’s biggest companies are understood to be unhappy with the deal – though there remains a small chance that last minute tweaks to details could salve its sting.
Others in the industry have voiced their support for the deal, including Novartis’ UK country president Haseeb Ahmad and EMIG’s chairman Leslie Galloway, who says the ABPI’s negotiating team had to battle against the government plan to set the growth rate even lower.
The new agreement is set to come into force in January 2019, and dispenses with the long-standing Pharmaceutical Price Regulation Scheme (PPRS) name, but the new deal retains many features of the existing one.
Health secretary Matt Hancock says the proposed agreement has come out of “tough but constructive negotiations”.
The industry has secured assurances that new medicines will benefit from fast-tracking from NICE, and that NHS England will also promote faster uptake – examples of this include recent deals on CAR-T therapies, plus a new expansion in the use of Keytruda in lung cancer, announced yesterday.
However NHS England continues to drive down prices, and is now firmly in control of market access for the industry’s high cost specialised medicines in England.
Announcing the deal, Matt Hancock said: “This new deal will be good for patients, good for the NHS and good for the UK life sciences industry.
“Cutting-edge and best value medicines will be fast-tracked and we will cut our medicines bill by £930 million next year following tough but constructive negotiations with the pharmaceutical industry – money we can reinvest into better NHS services, alongside the NHS long-term plan.”
He added that the deal would “also ensure the UK remains an attractive hub for research and investment,” though this is something many in the industry would take issue with, particularly in light of Brexit.
Health Minister Lord O’Shaughnessy said:
“The agreement is a vote of confidence for our world-leading life sciences sector, and shows the NHS is ready to embrace innovation so that patients get the best medicines earlier.”
He also highlighted ‘greater flexibilities’ in the deal aimed at helping small and medium-sized pharma companies, including reintroducing ‘the taper’ on rebate payments which better reflects the different revenue levels across the sector, welcome news for these firms.
Mike Thompson, Chief Executive of the ABPI, said: “This agreement is a commitment by the government and the NHS to work with us to support innovation for the benefit of patients. This means that people across the UK should see better and faster access to the most effective new medicines and vaccines.
“Under the scheme the NHS will have absolute certainty that the sales of branded medicines will not grow by more than 2% in any of the next 5 years – or industry refunds the money. This is a significant contribution by pharmaceutical companies to support the NHS.”
The industry hasn’t had a great deal of bargaining power in the talks – making the ‘voluntary’ title of the scheme more than a little ironic.
Its name reflects its contrast to a parallel Statutory Scheme, which a number of companies have opted to remain in recent years – but the government has taken steps to make this option less attractive, and aims to claw back more savings from this agreement as well.
The ABPI branded these plans ‘punitive’ earlier this year – followed soon after by unusually blunt language from Matt Hancock, who accused pharma of trying to ‘rip off taxpayers’.
Restricting medicines spending growth to just 2% put it at a significantly lower rate of growth than that expected in overall NHS spending.
The NHS in England is to get an extra £20bn a year by 2023, a rise on average of 3.4%.
As in the existing agreement, the Department of Health and Social Care hasn’t made any promises about where the medicines bill rebate money will be spent – which means it is likely to be used on areas other than drug spending.
The government has tried to counterbalance the effects of its grip on pricing with a Life Sciences Sector Deal, aimed at making the UK environment more attractive to the sector. An updated version of the initiative is to be launched in early December.