VBP Negotiations to Begin Next Month in UK

The United Kingdom's Department of Health (DH) and the Association of the British Pharmaceutical Industry (ABPI) have issued a joint statement announcing their commitment to "reaching an agreement on a pricing system that gives patients better access to the most effective medicines, at prices that encourage the NHS [National Health Service] to use those medicines when clinicians think their patients can benefit and deliver value to the NHS, and provide a fair reward for these innovative medicines". The negotiations over value-based pricing (VBP) will be conducted in conjunction with negotiations about the implementation of a successor to the Pharmaceutical Price Regulation Scheme (PPRS), and are due to begin in September. The PPRS's successor scheme will be operating from January 2014 for five years, and will cover the majority of branded medicines marketed before 2014. A few existing drugs might be assessed, however; these potentially include some of the drugs currently being funded by the Cancer Drugs Fund.

VBP, on the other hand, will affect "new medicines (new active substances)" that come to market from 1 January 2014. The DH and ABPI have stressed that the goals of the PPRS and those of the new pricing system largely coincide.

Although for 2009, the PPRS's goals were to "deliver value for money, encourage innovation, promote access and uptake for new medicines; provide stability, sustainability and predictability", under VBP, the government's objectives are as follows:

• To improve outcomes for patients through better access to effective medicines
• To stimulate innovation and the development of high-value treatments
• To improve the process for assessing new medicines, ensuring transparent, predictable, and timely decision-making
• To include a wide assessment, alongside clinical effectiveness, of the range of factors through which medicines deliver benefits for patients and society
• To ensure value for money and best use of NHS resources

Pricing

Under VBP, companies will be allowed to propose a price at the launch of the new medicine, with the VBP assessment carried out "as early and fully as possible". Furthermore, as the government intends to make the system stable and less bureaucratic, it expects the companies will be able to "predict how their new launches will fare".

In terms of having a common branded medicines pricing policy across the UK, considering that devolved administrations in Scotland and Wales have important roles in determining various aspects of health policies, it would therefore be necessary to ensure the "close working" of the these health departments.

Outlook and Implications

The VBP system is to replace the PPRS system, which had been in place since 1957 and was most recently renewed in 2009. The current statements do not disclose anything different from what has already been announced as part of the UK healthcare reform package. If anything, it is interesting that in the current statement, VBP is described in conjunction with the successor to the PPRS, seemingly in an effort to divert focus from VBP. Another noteworthy aspect is that the statement indicates that VBP would affect "new medicines (new active substances)". Earlier indications were that the VBP methodology would also apply to new indications of previously approved medicines. It remains to be seen whether this is a change in direction—given how complicated it would be to have a different value-based price for each different indication of a drug—or if it was simply an error in the current statement that will be rectified in the actual implementation of the VBP methodology. Interestingly, VBP is described as a voluntary scheme, much like the PPRS. This suggests that there will be penalties for companies opting out of VBP, as there are for those opting out of the PPRS.

The current development follows the recent warnings issued by the ABPI that the disproportionate focus of the new system on "breakthrough drugs" versus incremental innovation "threatens the future of pharmaceutical medical research in the UK" (see United Kingdom: 7 June 2012: Pharmaceutical Industry Issues Warning on Effects of VBP Ahead of UK Price Talks). Although the joint statement focuses on specifying "supporting innovation" as one of the aims for the upcoming negotiations, how this will translate into practice remains to be seen.