Spending on medicines in England rose to £17.4bn in 2016-17 © Graphia76/123RF
Spending on medicines in England rose to £17.4bn in 2016-17 © Graphia76/123RF

Medicines deal will save NHS £930m

26 November 2018

A new deal being negotiated between the government and the pharma industry will save the the NHS around £930m on medicines next year, the Department for Health and Social Care (DHSC) has announced.

The outline of a “voluntary scheme for branded medicines pricing and access” has been agreed with the Association of the British Pharmaceutical Industry (ABPI) after months of what health secretary Matt Hancock described as “tough but constructive negotiations”.

EY was brought in to help negotiate the deal, with the firm being paid £475,000 by the DHSC for its services.

The deal is designed to keep growth in the branded medicine bill predictable and affordable by placing a 2% cap on the annual growth in sales of such drugs to the NHS.

Pharmaceutical companies will reimburse the NHS for any spending above this cap, something which is expected to save the NHS £930m in 2019 alone.

Fast-tracking of drugs that come onto the market will mean that patients could access new medicines up to six months earlier than at present, according to the DHSC.

In addition, price controls will be simplified and commercial talks made faster and more flexible under the new scheme.

Hancock commented: “Cutting-edge and best-value medicines will be fast-tracked and we will cut our medicines bill by £930 million next year following tough but constructive negotiations with the pharmaceutical industry.”

And Mike Thompson, ABPI chief executive, said: “Sales of branded medicines will not grow by more than 2% in any of the next five years – or industry refunds the money. This is a significant contribution by pharmaceutical companies to support the NHS.”

The new deal will replace the existing Pharmaceutical Pricing Regulation Scheme, which expires at the end of next month.

Estimated total NHS spending on medicines in England rose from £13bn in 2010-11 to £17.4bn in 2016-17, according to the Kings Fund.

And the issue of how much the NHS spends on drugs is a contentious one, with a series of scandals in recent years where drugs companies have overcharged the NHS for medicines.

Last year the Health Service Medical Supplies (Costs) Bill came into force in a bid to help control the cost of medicines.

It enables the government to take action where there are excessive price rises on drugs, irrespective of whether or not the manufacturer or supplier is participating in the voluntary price regulation scheme for branded medicines.

Earlier this year health minister Lord O’Shaughnessy described how the bill provided the “right powers to ensure that the NHS is not being ripped off by unscrupulous providers of any kind of medicine.”

And in September, Hancock pledged that he would not “let big pharmaceutical companies hold the NHS to ransom” when commenting on negotiations between the government and pharma firm Vertex over the costs of cystic fibrosis drug Orkambi, which has a list price of £104,000-a-year per patient.

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