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New five-year drugs pricing deal could lead to shortages, warns BGMA

A new five-year voluntary scheme for branded medicines pricing will double the cap on branded medicines sales growth to 4%, the government and industry have announced.

A “landmark” new medicines pricing agreement will save the NHS £14 billion over five years, the government, NHS England (NHSE) and the industry negotiator, the Association of the British Pharmaceutical Industry (ABPI), announced this week (November 20).

The new voluntary scheme for branded medicines pricing, access and growth (VPAG) replaces the voluntary scheme for branded medicines pricing and access (VPAS), which expires at the end of this year.

Read more: Communication fundamental to avoid medicines shortages

The new deal will run for five years from 2024 until December 31, 2028, according to a joint statement released by the bodies.

It said that the new voluntary scheme will “double” NHS savings compared to the current scheme.

 

“Affordability mechanism”

 

The agreement sets an annual cap on the sales of branded medicines to the NHS, with sales above the cap returned to the government by a levy, according to the statement.

The annual allowed growth in sales of branded medicines will rise from 2% in 2024 to 4% by 2027, it said.

The agreement also sees the introduction of an “affordability mechanism” for older medicines that will subsidise newer “more innovative” medicines, it added.

Read more: UK rebate mechanism could force market withdrawals, warns BGMA

This mechanism means that older medicines that have not dropped in price are subject to a “top-up rate” of up to 25% on top of the base rate that applies to older medicines, it said.

According to the statement, this shows that the agreement is “explicitly pro-innovation and pro-competition”.

And it said that the deal will also see the pharmaceutical industry invest “£400 million over five years” on clinical trials, manufacturing and “health technology assessments”.

 

“Risk of increased medicine shortages”

 

But the British Generic Manufacturers Association (BGMA), which lobbies for the generic manufacturing supply industry and was a vocal critic of the previous VPAS regime, said that the terms of the deal meant there was “a continuing risk of increased medicine shortages”.

BGMA chief executive Mark Samuels said that the body was “very disappointed” by the method used to calculate the reference price in the deal’s “price erosion” affordability mechanism.

Mr Samuels added that the BGMA was “pleased” that the principle of such a mechanism was included in the agreement, as it had previously proposed that this would “safeguard” the supply of medicines to the NHS.

Read more: Manufacturers lament DH’s decision to raise sales tax on branded medicines

However, he said that the reference price calculation would be a “high hurdle” for the supply of generic medicines and would increase the risk of drug shortages.

Mr Samuels also said that the BGMA is “concerned” about the method used to determine which products are newer or older, calling the proposed method “a recipe for disaster” that could lead to “millions” in costs to the NHS.

He added that the BGMA wanted “more details” on proposals for the £400m investment and in order to determine whether the VPAG is a “fair deal for the whole industry and patients”.

The ABPI declined to comment. C+D also approached the DH and NHSE.

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