Pharma to Cap UK Sales Growth in Exchange for Faster NICE Appraisals and Launches

The Association of the British Pharmaceutical Industry, a trade group representing UK drug makers, announced that it has reached a voluntary deal with the UK government that involves capping the growth of sales of brand-name drugs to the National Health Service at 2% per year in exchange for faster product launches and speedier appraisals by the National Institute for Clinical Excellence (NICE).
Kelly Davio
November 28, 2018
The Association of the British Pharmaceutical Industry (ABPI), a trade group representing UK drug makers, announced that it has reached a voluntary deal with the UK government that involves capping the growth of sales of brand-name drugs to the National Health Service (NHS) at 2% per year in exchange for faster product launches and speedier appraisals by the National Institute for Clinical Excellence (NICE).

Under the Branded Medicines Pricing and Access deal, which is expected to take effect in January 2019 once it has been agreed to in full, the cap applies to the sales of all branded drugs to the NHS, and pharmaceutical companies will repay the NHS for spending that exceeds that limit. According to ABPI, the cap could deliver approximately £930 million (approximately $1.2 billion) in savings in 2019. 

In exchange for the 2% cap, the Department of Health and Social Care (DHSC) has agreed that drug makers will receive faster appraisals from NICE, the nation’s health technology assessment body, which could lead to launches expedited by up to 6 months. Drugs recommended by NICE must be funded by the NHS, and the deal, says ABPI, will mean that all new medicines will be receive a NICE appraisal. 

According to the DHSC, companies that offer the best-value new medicines will also have “opportunities for greater commercial flexibility.” Price increases of drugs will continue to require DHSC’s approval, however.

ABPI adds that the deal will simplify price controls for pharma; brand-name drug makers that do not participate in voluntary industry–government agreements on drug pricing are currently required to pay to pay the government 7.8% of their sales of products to the NHS. Notably, in August 2018, the UK government proposed bringing biosimilar drugs under these price controls, prompting criticism from the biosimilars industry. Neither ABPI nor DHSC specified whether the simplified price controls under the newly formed deal would encompass biosimilars.

While ABPI has pointed to the 2% maximum as a boon for the NHS, currently, growth in spending on branded drugs is capped at 1.9% for 2018 under the Pharmaceutical Price Regulation Scheme, an agreement that expires at the end of this year and that will be supplanted by the new agreement.

Furthermore, announcement of the agreement comes just as the NHS is poised to slash its yearly spending on brand-name Humira, the costliest drug to the health system, after the arrival of biosimilar adalimumab; this week, the NHS announced that spending on adalimumab would drop by £300 million (approximately $386 million) as it implements biosimilars of the high-cost drug. 

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