Pharmaceutical Price Regulation Scheme

Wednesday 6th November 2013 Written Statements

[The Minister of State, Department of Health (Norman Lamb)]

My right and noble Friend the Under-Secretary of State for Health, Earl Howe, has made the following written ministerial statement:

I am pleased to announce today the heads of agreement on the new pharmaceutical price regulation scheme (PPRS). The PPRS is a voluntary scheme agreed between the Department of Health, acting on behalf of the UK Government and Northern Ireland and the branded pharmaceutical industry, represented by the Association of the British Pharmaceutical Industry (ABPI), under section 262 of the National Health Service Act 2006.

The current voluntary pricing scheme, the 2009 PPRS, will terminate on 31 December 2013. Following negotiations, the Department of Health and the ABPI have reached agreement on the outline terms of a new scheme which will operate for five years starting from 1 January 2014.

The new scheme will provide an unprecedented level of certainty on almost all the NHS branded medicines bill. The bill will stay flat over the next two years and will grow slowly after that. The industry will make compensating payments to the Department of Health if NHS spending on branded medicines exceeds the agreed growth rate. The agreement therefore provides stability and predictability to both the Government and the UK pharmaceutical industry, supporting the industry’s global competitiveness. It will encourage the use of innovative and effective new medicines in the NHS.

Alongside these arrangements, the National Institute for Health and Care Excellence (NICE) will continue its work to introduce the broader value assessment for new medicines covered by value-based pricing. We have listened to feedback from patients’ groups that they would welcome further opportunities to feed into the development of the new arrangements for value assessment and have agreed that NICE will carry out a frill public consultation before implementing the methods for wider value assessment in autumn 2014. Publication of the complete 2014 PPRS is expected later in the year.

In addition to the agreement, I am also publishing today the Government response to the consultation on the statutory pharmaceutical pricing scheme, which contained proposals to strengthen the scheme, and align it more closely to the PPRS. This scheme provides an important safeguard for the NHS, controlling the prices of branded medicines sold to the NHS by pharmaceutical companies that decide not to join the voluntary PPRS. Through this response document, we are setting out the changes we will be making, including introducing a 15% price cut on branded medicines sold by statutory scheme companies. We will shortly be introducing amending regulations to effect these changes.

Copies of the heads of agreement, the response to the consultation and the related impact assessment have been placed in the Library. Copies are available to hon. Members from the Vote office and to noble Lords from the Printed Paper Office.