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First payments made under PPRS scheme

Published on 07/03/14 at 08:11am
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The first payments in pharma’s new pricing deal with the Department of Health are to be made this month as the latest five-year Pharmaceutical Price Regulation Scheme (PPRS) comes into force. 

UK trade body ABPI, which agreed the deal in November with the government, says it has no details yet on what figure the initial quarterly payments are likely to reach. 

The ABPI says 134 companies representing 93% of the industry have signed up to the voluntary scheme - up from the 88% which agreed to the previous PPRS. 

For the first year payments have been fixed at 3.74% of companies’ net sales, although they will be corrected based on actual growth in subsequent years.

Although Value-Based Pricing was all but removed from the mix in the negotiations - which was welcomed by pharma - the NHS drugs budget must remain flat for the next two years, and grow by less than 2% for the three years after that. 

Above this level pharma companies must make up the difference and reimburse the Department of Health with the extra money made. While many have accepted the deal as reasonable, some in pharma have criticised the arrangement. 

Nine UK pharma firm bosses, including those from Pfizer, Novartis and Sanofi wrote an open letter bemoaning the PPRS policy and the resulting de facto price freezes. 

ABPI chief executive Stephen Whitehead defended it this week as “fundamentally the best deal we could achieve in very tough times”, and believes the fact that so much of pharma has bought into it means that “this deal provides a game-changing opportunity to improve the UK environment”.

The organisation has consistently said it hopes the PPRS may address what it calls the “long history of low patient usage of innovative medicines in the UK, which has been getting progressively worse over the life of the last scheme”.

Whitehead added: “The ABPI continues to work with the Department of Health and NHS England to address the poor usage in the UK and ensure that the scheme delivers better access to innovative medicines for patients.” 

The most critical reaction from pharma says that the new PPRS is a missed opportunity for patients, which creates financial problems for smaller companies while stifling life science investment. 

Those with an NHS turnover of between £5 million and £25 million per year will be the hardest hit, as the government refused to fund exemptions for manufacturers with these levels of revenue, although they will do for those earning under £5 million per year. 

Whitehead has already acknowledged that companies in this category will find the deal ‘extremely tough’, and the BioIndustry Association has expressed concern that the new PPRS will put off investors.

Adam Hill

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