New voluntary scheme to potentially save the NHS ￡14 billion over five years

The new Voluntary Scheme for Branded Medicines, Pricing, Access and Growth (VPAG) is due to come in effect in 2024, and will double the annual allowed growth in sales of branded medicines from 2% in 2024 to 4% by 2027.??

The deal was agreed between the government, NHS England and the Association of the British Pharmaceutical Industry. Key highlights are:???

• Improved access to cutting edge treatments for NHS patients, supporting the financial sustainability of the health service and advancing the UK life sciences sector??
• The pro-innovation and pro-competition agreement will introduce a new mechanism to support lower industry payment rates for more innovative and pioneering branded medicines?
• Significant industry investment in UK clinical trials, manufacturing and health technology assessments strengthening the UK’s global competitiveness?

An additional ￡400 million of life sciences investment, provided by industry, will be directed to accelerate work on clinical trials, manufacturing and in health technology assessment agencies.??

Medicine expenditure in the NHS reached ￡19.2 billion in England in the last financial year, with ￡14 billion of expenditure classified as “branded”. Industry paid back ￡2 billion of rebates last year under the existing agreement. The new agreement sets a yearly cap on the total allowed sales value of branded medicines to the NHS each year (with sales above the cap paid back to the government via a levy). Under the new terms, the level of annual allowed growth in sales will double from 2% in 2024 to 4% in 2027.??

In addition, the new agreement introduces an affordability mechanism for older medicines. Older medicines which have not had a price reduction, will have to pay a top-up rate of 25% in addition to the older medicine base rate of 10%. The top-up will taper down for older medicines that have already seen a price reduction. This income from older medicines will support lower rates applied to innovative medicines.?

On the theme of innovative medicines, the agreement also highlights how the government, industry and the NHS will commit to piloting new approaches to funding Advanced Therapy Medicinal Products (ATMPs).??

Interestingly the deal includes commitments that will see NHS England establish a data driven approach to the use of medicines, ensuring the latest medicines are reaching patients with the highest need as quickly as possible. Furthermore, the development of a local formulary national minimum dataset will provide a tool to address variation in the implementation of NICE guidance to improve equity in access to clinically and cost-effective treatments.?

James Whitehouse said “Whilst manufacturers of older medicines may feel unfairly treated, the push and reward for innovation and the willingness to find mechanisms to fund ATMPs is encouraging in a post-Brexit NHS landscape. We can often assume that as a single payer national system variation in access doesn’t exist, but it does. The announcement of a local formulary national minimum dataset to improve equity in access to clinically and cost-effective treatments is particularly interesting as we address head-on the NICE implementation dilemma”.?

Source: https://www.gov.uk/government/news/landmark-deal-to-boost-nations-health-and-save-nhs-14-billion