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PPRS deal ‘dreadful’, says EMIG

Published on 26/11/13 at 08:16am
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The Ethical Medicines Industry Group (EMIG) has slammed the new PPRS plan, calling it a ‘dreadful deal’ for its members.

The UK research-based trade association represents small and medium-sized (SME) pharma and biotech firms, and it says the new PPRS is in danger of driving away investment from the UK.

EMIG chairman Leslie Galloway told Pharmafile: “The more you get into the detail, the more concerned I am about this dreadful deal.”

One of his biggest bugbears is the quarterly rebate which all companies earning more than £5 million from the NHS will pay to the Department of Health under the new agreement, which was negotiated by the ABPI with the government.

This has been introduced with the intention of keeping the NHS’ drugs bill down, but ABPI chief executive Stephen Whitehead has already spoken of his disappointment that the government would not fund exemptions for relatively small companies earning between £5 million and £25 million from the NHS.

“To restore that rebate to those companies would cost the NHS £7.3 million,” suggests Galloway. “That is negligible compared to the damage this will do.”

The ‘real bite’ is the exemption threshold. “If you make under £5 million there is no rebate,” says Galloway. “But if you make five million and one pounds you pay £187,000, because it is based on the five million and one pounds figure and not on the one pound over £5 million.”

The rebate is ‘unfair and inappropriate’, he goes on. “You need to understand the drivers of the medicines bill: it’s not new medicines. The biggest driver is the medicines that have been around for four or five years.”

His contention is that these tend to be the products owned by the larger pharma companies - but that EMIG members - who are smaller - will be paying the same rebate. “This average is done on the basis that it is treating people equally,” Galloway went on. “But that is not the same as treating them fairly.”

Companies could also be required to pay the rebate before they have been paid by the NHS, creating potential cash flow issues for smaller firms, not to mention the administrative burden of working out the figures once every quarter.

EMIG accepts that it has no wriggle room on the rebate itself, but would like it switched to a yearly payment.

Galloway believes there is an irony in the government portraying the patent box as a means of attracting SME investment, while - as he sees it - potentially discouraging such investment with the new PPRS.

“Without SMEs, where do they think the innovation is going to come from?” he asks. EMIG’s argument is that such firms already provide a significant benefit to the economy in terms of taxes and the ‘hinterland’ of jobs they create in allied services.

“I haven’t met one company that’s happy,” Galloway said.

Nine pharma firms - including several large players - have already written an open letter lambasting the PPRS policy and the resulting price freezes.

Value-based pricing - which was due to be a cornerstone of the new pricing agreement - has been to all intents and purposes removed, although NICE is to take on a broader remit when appraising new medicines, introducing a value-based assessment to its activities.

Few practical details about this are available, although it is possible that judgments on things such as how a new drug may help a patient return to work or leave social care might mean that more drugs are approved.

However, what is certain is that NICE will not add the new method to its processes before autumn 2014, following a consultation on the subject in spring next year.

“The NICE board will be asked in the new year to approve methods of value assessment,” a spokesman told Pharmafile. “It will go out to consultation in the spring, to allow a bit of time for more consultation with patient groups, the industry and our other stakeholders.”

Adam Hill

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