Health Solutions

The headlines of the 2014 Pharmaceutical Pricing Regulatory Scheme (PPRS) were published last Wednesday.

This is a voluntary scheme which regulates the prices for branded pharmaceutical medicines across primary and secondary care in the UK, but does not cover generic medicines.  In launching the scheme the Department of Health said that “this breakthrough deal will allow the NHS to increase the availability and use of the best branded medicines and most innovative treatments without risking a spiraling bill for the taxpayer". Furthermore that "pharmaceutical companies will benefit from greater certainty on how much will be spent each year and increased use of new and recently developed medicines.”

The new scheme is significantly different to past arrangements as it is based on an allowed growth rate for the UK medicines bill, rather than a price cut. Any spend on medicines above the allowed growth rate – 0%, 0%, 1.8%, 1.8%, 1.9% from 2014 to 2018 – will need to be repaid by pharmaceutical companies to the Department of Health.  One important difference from the 2009 PPRS is that the 2014 scheme will not include headline price adjustments. It also tackles the risk of continued pharmaceutical spending growth which the UK health departments are struggling to afford in the current financially challenged environment.  Indeed it means that NHS spending on branded drugs –more than £12 billion in 2011/12, will remain flat for two years, followed by small increases of less than 2% in the following three years. This marks a significant saving for the taxpayer when compared to an average growth of 5% in recent years. 

There are some significant exclusions from payments under the scheme including: small companies with revenue under £5m; central tenders including vaccines and pan-flu stockpiling; parallel imports; and new products launched on or after January 2014 (although they are included in the limit on allowed growth).

The industry response, while