Print“This has been a very challenging and long negotiation and it should not be underestimated how tough this deal is for the industry, says Deepak Khanna, president of ABPI.”
The U.K. government and the pharmaceutical industry have agreed to a tough five-year deal that limits the amount the National Health Service will spend on branded medicines to $19.25 billion (£12 billion) annually with industry paying for additional expenditures. The new Pharmaceutical Price Regulation Scheme is set to take effect at the beginning of 2014 when the previous one runs out. It is the first time a fixed limit has been placed on what the NHS will spend on innovative drugs. That limit will remain flat for two years, followed by increases of less than 2 percent per year in the following three years. This compares to a 5 percent average annual growth in spending over the past five years.
The agreement, which is voluntary, will allow the NHS to increase the availability and use of innovative treatments without risking an escalating bill for the taxpayer, while drugmakers have greater certainty that their newest medicines will be available to patients in Britain.
It is a result of months of negotiation between the Department of Health and the Association of the British Pharmaceutical Industry working together to balance access to innovative medicines with the government’s economic constraints on paying for them.
“This has been a very challenging and long negotiation and it should not be underestimated how tough this deal is for the industry,” says Deepak Khanna, president of ABPI. “The negotiations were built on a myth that medicines are expensive in the UK, which is not true. The UK already spends amongst the lowest on medicines as a percentage of GDP and has some of the lowest prices in Europe, yet UK patients still do not always get access to the most innovative medicines. In 2011, the overall spend on medicines represented less than 10 percent of total UK-wide NHS expenditure.”
The previous agreement generated savings through an agreed price cut on branded medicines sold to the NHS but with no upper limit on overall cost. Pharmaceutical companies that sign on to the new agreement will cover any additional expenses incurred by the NHS, paying the agency a rebate estimated to be about 3.7 percent in 2014. Those that do not wish to take part in the scheme will automatically face a price cut of 15 percent in the price the NHS will pay. Companies with less than $8 million of sales to the NHS are exempt.
It’s those companies that sell between $8 million and $40 million annually of branded drugs to the NHS that will be hit hardest by the agreement, Khanna says. “Companies in this category will find this extremely tough, and we need the government to work to ensure the UK is attractive to smaller companies.”
November 08, 2013
http://www.burrillreport.com/article-u_k_caps_government_drug_spend_.html
.gif)
