Two Big Pharma Companies Leave NHS Pricing Scheme Over Punitive VPAS Rebates

Instead, those suppliers will supply under the Statutory Scheme for Branded Medicines. This shows the strength of concern over VPAS, given that the Statutory Scheme is imposed by law for anyone not subject to the Voluntary Scheme.

The ABPI has warned that VPAS is threatening to damage the UK life sciences industry.

Laura Steele, President and General Manager, Northern Europe at Eli Lilly, said: "Getting the VPAS right is a win for patients, taxpayers, and industry, so government must act urgently to rescue our partnership. The current scheme has harmed innovation, with costs spiralling out of control, and the UK falling behind other major countries to be left as a global outlier."

Todd Manning, the General Manager of AbbVie UK said the current rates were not seen in any comparable country, and will demonstrably impact on the company's ability to operate sustainably in the UK.

What Is VPAS?

VPAS is an agreement on pricing and rebates between the Government - through the Department of Health and Social Care (DHSC) as well as NHS England - and the ABPI and manufacturers or suppliers who signed up to VPAS. Under VPAS, there is an annual repayment rebate, which suppliers of branded medicines including branded generics, in vivo diagnostics, blood products, dialysis fluids, branded products supplied through tenders or central contracts and biological medicinal products (whether branded or unbranded) have to pay. The reason for the rebate is to enable growth in the medicines budget to enable more innovation and better health outcomes, but only up to a certain limit. Under the scheme, if too much is spent on medicines, then the industry has to pay some money back through the VPAS rebate.

The repayment percentage for each year of VPAS therefore depends on the difference between the allowed annual growth in sales to the NHS of branded medicines and what is actually spent. In 2019, in the first year of VPAS, the repayment percentage was 9.6%, and the industry repaid DHSC £850 million in total. It rose to 19% in 2022, which was above an agreed cap of 15% and will be 27% this year.

The current VPAS scheme will end in December 2023, and the ABPI and Government are currently negotiating the new scheme from 2024.

Other Recent Warnings

This announcement follows other dire warnings for medicines supply in the UK recently. In October, the British Generic Manufacturers Association (BGMA) warned that the crippling effects of VPAS was going to drive cheaper generics out of the market.

Meanwhile, in astonishing and concerning results of a November survey of EMIG members, 50% said they would reduce supply of medicines in the UK in 2023, whilst a further 40% were discussing a reduction.

Leslie Galloway, Chair of EMIG, had commented: "The EMIG survey indicates the 2023 VPAS rebate will have an adverse impact on supply and investment in the UK. 2023 will be painful and, if there is to be hope for our industry for 2024 and beyond, we need to learn lessons from this current disastrous episode and rethink, not only how this Scheme is negotiated, but have an open Review of how medicines are funded."

Hear More About the Issue of Pharma Rebates and Its Impact on Patients

This pricing scheme is sending shockwaves through the industry and will affect the patient community and their families.

At the invitation-only PING Conference, which VWV will be holding in June 2023 in association with EMIG, we will be hearing about the impact of VPAS on suppliers of medicines, as well as what is likely to be coming round the corner with the new VPAS scheme, which will be in place from 2024. Speakers will include senior representatives of the Association of the British Pharmaceutical Industry, EMIG and the BGMA.

Other themes at this year's PING Conference will include issues over regulatory approvals, skills and space.

If you would like to be invited to attend the PING Conference in June, please contact Paul Gershlick in our Pharmaceuticals and Life Sciences team on 07795 570 072, or complete the form below.