The billions of pounds due to be clawed back from pharma firms under a new NHS pricing deal should not be diverted to help hospitals cut waiting lists, the head of the Association of British Pharmaceutical Industry has urged.

Association chief executive Stephen Whitehead said he would be “disappointed” if the £4bn it expects to be returned to the NHS over the next five years was used to cut elective waiting times.

The money is being paid back under the Pharmaceutical Price Regulation Scheme 2014, an agreement between the Department of Health and the industry.

This will see pharma firms refund any growth in the NHS medicines bill above an agreed level over the next five years.

In the first six months of the year £150m has been returned to the NHS. Mr Whitehead told HSJ he expected this to be closer to £1bn next year.

He said the industry had understood during negotiations on the deal that the money would be used to “create headroom for innovative new medicines” that were coming through the pipeline.

However, NHS England confirmed it had included the “anticipated rebate” in its allocations to healthcare commissions for 2013-14 and 2015-16.

A spokesman for the DH said it was ensuring the money was used in “frontline NHS care to benefit patients”.

Asked if he would be disappointed if the money was used for business as usual or initiatives such as waiting list reduction, Mr Whitehead said: “Yes. Candidly we would be disappointed.

Stephen Whitehead

It would be ‘disappointing’ if the expected £4bn returned to the NHS was used to cut elective waiting times, Stephen Whitehead said

“We’ve pushed hard for this money to be used for patient access to new and innovative proven medicines.”

Under previous pricing deals between industry and government, cash had been returned to the NHS in the form of price reductions on branded medicines.

There is no stipulation in the current agreement that the rebate would be spent directly on new medicines.

Mr Whitehead said the industry had agreed on a rebate rather than a price cut in a bid to “revolutionise the NHS attitude to innovative medicines and their adoption” by making the amount returned to the health service more explicit.

“There’s a recognition the NHS is going through quite tough times over the course of the next few years… What we sought to do is try and ensure that during that difficult period, access to medicines did not become significantly more difficult,” he said.

The Scottish government recently announced it would use the rebate money to part fund a new medicines fund worth £80m over the next two years - a move welcomed by the ABPI.

In England, the cancer drugs fund - worth £160m over the next two years - allows patients to access drugs not judged to be cost effective by the National Institute for Health and Care Excellence.

Now in its fifth year, the fund has proved controversial as companies are able to secure higher prices for their drugs. There is no similar scheme for other disease areas.

Mr Whitehead said there were some characteristics of cancer that justified it being made a special case such as the “iterative nature of discovery”.

However, he said the fact the fund was being spent on a few very high priced medicines was “of concern” when growth in the medicines bill is being underwritten by the industry.

“We all know you can get to more [money]… through the cancer drugs fund, we saw that recently with Kadcyla,” he added.

Kadcyla, a breast cancer drug, was recently rejected by NICE on the grounds it was not cost effective at the price put on it by manufacturer Roche, which is not a member of the ABPI.

Asked if he agreed with NICE’s decision, Mr Whitehead said his “anxiety” was the scale of the difference between NICE’s limit of cost per quality adjusted life year of up to £50,000 for end of life drugs and the price put forward by Roche of £160,000 per quality adjusted life year.

He said: “Kadcyla is clearly a good medicine, a good drug. But you have to look at value, and the gap between the two positions was so large that it couldn’t be bridged, unlike other companies that do seek to bridge that gap.”

Patients can still access the drug through the cancer drugs fund, leaving little incentive for Roche to drop the price.

Roche argues the NHS need not worry about the cost of individual drugs as the rebate deal will see the industry pay back growth in the medicines bill above an agreed level.

This is set at 0 per cent for the first two years and then no more than 1.9 per cent a year over the remaining three years of the deal.

Mr Whitehead said Roche’s position was “somewhat concerning”.

“It’s not true and neither is it fair to other innovative companies,” he said.

If it had been approved at £160,000 it would have left other companies refunding a disproportionate amount to the NHS, relative to the prices they are paid for their drugs.

Mr Whitehead said the issue highlighted that NICE did need to improve how it assessed cancer drugs.

He called for the cancer drugs fund to be used only for medicines with small patient populations, where it was difficult to gather enough evidence to go through a full NICE approval process.

NICE consulted on proposals for a value based pricing system earlier this year as envisaged by the Conservative policy set out in the party’s manifesto for the 2010 election. However, the NICE board decided to shelve the proposals after concluding they would not solve fundamental concerns with how the NHS assess new medicines. The body has called for a wider review of innovation of the evaluation and adoption of new treatments.

Mr Whitehead said value based pricing had proved unworkable because it would have discriminated against people on economic grounds.

“The industry was confused by it and as we went through more and more discussions it became harder and harder to understand how it could be applied.

“It would’ve sought to move pharmaceutical spending to those drugs which have a greater economic impact, so, do they you back to work quicker?

“That doesn’t really help assessment in things like cancer or chronic disability.

“The NHS itself can’t discriminate on economic capability grounds.”

However, he said the NHS needed to stop looking at breakthrough medicines as a problem, as seen in the recent revelations NHS England was seeking to limit access to a drug found to cure hepatitis.

He said: “Lives are transformed but often the system views it as a problem. I find that quite dispiriting.”