What NHS England isn’t telling you, and more indispensable insight for commissioners. This week by HSJ commissioning correspondent Sharon Brennan.
The government is currently negotiating a fresh pharmaceutical price regulation scheme deal, which must be in place for 1 January next year – just four months before Britain is due to leave the European Union.
With the backdrop of Brexit negotiations and the threat hanging over the government of pharma abandoning the UK, it may be one of the most politically tricky for some time.
From the pharma point of view, there are increasing concerns about the price of branded drugs in the UK and industry is looking for a deal that reassures it that continued investment here is valued.
The current PPRS deal has capped the NHS’s spend on branded medicine – which accounts for 70 per cent of total UK drug spend – with any income to industry above the cap paid back to the exchequer. As a result, around 150 pharma companies have paid back nearly £2.8bn in total over the five years of the agreement.
Under the current five year PPRS the annual spend on medicines covered by the deal increases by an average 1.1 per cent in cash terms each year, and in two of these years it was frozen in cash terms.
While negotiators are keeping cards close to chests, a revised rebate system appears to be the way the wind is blowing. But in return for continuing the rebate system in any form, pharma wants a most robust commitment from government that adoption of new medicines will be accelerated.
As it stands the UK’s commissioning of new medicines is one of the slowest in Europe – according to the Government’s Office of Life Science, for every 100 patients that get access to new treatment in first year of launch in France and Germany, 18 get access in the UK.
Pharma argues its continued investment in research and development in the UK – which the government is desperate to maintain after Brexit – is dependent on the NHS showing more willingness to purchase its new products in their early years of life.
The Association of the British Pharmaceutical Industry chief executive Mike Thompson told its annual conference last month that the outcome of the current PPRS must “signal collective ability to resolve” this issue.
The idea of a new medicines fund, similar to the cancer drugs fund, has been mooted to ensure the proceeds of the rebate go into funding new drugs. What pharma will be trying to avoid is seeing this money “disappear into a black hole again” – the general consensus on the result of the current round.
Meanwhile industry is also still smarting from the implementation in March last year of a £20m affordability cap on new drugs by NHS England and the National Institute of Health and Care Excellence.
Some involved in discussions are keen to see the reinstatement of a taper deal based on the size of the pharma company, as seen in some previous PPRS deals. It is hoped this will encourage small to medium sized firms to set up and remain in the UK.
Currently companies with sales to the NHS of less than £5m per annum are exempt from the rebate. I’ve been told discussions include raising this cap to £10m and introducing proportional rebate charges until a company reaches £40m turnover.
Of course, the resulting deal will quickly knock on to NHS commissioner and provider budgets – including in the final three months of 2018-19.
Industry’s hopes are set against the ongoing unprecedented squeeze on NHS funding – despite the prime minister raising hopes that a better long-term budget settlement may be just around the corner.
NHS England has shown growing desire and ability in recent years to hold down drugs spend, especially the rapidly-growing cost of medicines falling within specialised services, and new, pricey blockbuster items.
The national commissioner has a formal seat at the PPRS negotiating table for the first time. It will fiercely resist – and/or seek to create wriggle room – in moves to dictate how the rebate is spent, especially as it will find it hard to push down branded medicine prices even further.
As negotiations continue, it is also worth keeping an eye on the rumbling debate about funding Orkambi, a new generation drug for people with cystic fibrosis. It is still not available on the NHS two years after it was licensed.
Late last year 125 MPs across parties wrote to Jeremy Hunt demanding NHS access, and a further debate earlier this year resulted in ministers writing directly to Vertex, the manufacturer, pressuring it to work with NHS England to resolve the issue.