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Branded medicines face new NHS cost controls

Manufacturers of branded medicines face new statutory controls on the cost of their drugs to the NHS in the UK from 1 April.13 Mar 2018

The new rules, which will apply to pharmaceutical companies that supply branded drugs to the NHS and do not otherwise participate in the voluntary Pharmaceutical Price Regulation Scheme (PPRS), are set out in the Branded Health Service Medicines (Costs) Regulations 2018.

The government consulted last year on introducing the new regulations. The Department of Health and Social Care (DHSC) issued its response to the consultation (48-page / 361KB PDF) late last week. The new regulations will replace existing rules that make up the current statutory price control mechanism and will apply across the UK, according to a statement by parliamentary under secretary of state for health Lord O'Shaughnessy.

The new regulations introduce a new payment mechanism which will require specific branded drugs manufacturers to make a payment to the DHSC of a percentage of their sales of branded health service medicines to the NHS. Initially that percentage rate will be set at 7.8%, but the payment mechanism will be subject to annual review. The money collected will reinvested in the NHS, the government said.

Small companies – those with sales or estimated sales of branded health service medicines of less than £5 million – will be exempt from the payment mechanism, and sales of over-the-counter medicines will also be excluded.

Manufacturers subject to the new payment mechanism, however, will face potential interest charges and daily penalties if they fail to make the required payment.

The new regulations also set out how the maximum price at which branded medicines subject to the statutory scheme can be sold to the NHS would be determined, as well as the process that companies would need to follow to apply for price increases. They also provide government ministers with powers to decrease prices in certain circumstances.

Further reforms to the sales information that manufacturers of branded medicines are required to record and provide to the government are also set out in the new rules.

The DHSC said: "The government recognises that companies may need to adjust their processes to comply with these new information requirements. During the initial implementation phase of the 2018 Regulations, the DHSC will be open to engagement with companies to discuss flexibilities with regards to the deadlines for these requirements, where the company considers it will not be able to meet the deadlines."

At the time of its consultation last year, the government also consulted on plans to force manufacturers, importers and wholesalers to record and provide sales data on the unbranded generic medicines and other "special medicinal products" that are supplied to the NHS. It said that a response to that consultation "will be published shortly".