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U.K. to cap drug spending, industry covering balance

November 7, 2013 1:36 AM UTC

The U.K. government introduced for the first time a fixed limit on how much NHS will spend on branded drugs, with industry responsible for any additional costs. The details came in an outline of a new, five-year voluntary Pharmaceutical Price Regulation Scheme (PPRS), which will cover pricing for the majority of drugs on the market as of Dec. 31, 2013. The U.K. Department of Health and the Association of the British Pharmaceutical Industry (ABPI) negotiated the new scheme, which is slated to take effect in January 2014 and will replace the existing voluntary PPRS, which has been in effect since 2009 and is set to expire at year end.

Under the new PPRS, a company will be required to make annual payments to NHS that are based on a percentage of all sales of its branded drugs to NHS. The rate will initially be 3.74% in 2014 and will be adjusted in future years based on NHS's actual total spending on all branded drugs. The agency's total spending on branded drugs will be capped during 2014 and 2015 so that there is no growth in the cost of branded drugs to NHS. That amount will be bumped by 1.8% for 2016 and 2017, with a 1.9% bump in 2018. Companies with sales less than L5 million ($8 million) in the previous year will not be required to make a payment to NHS. ...