Those are the views of David Watson, Executive Director Patient Access at The Association of the British Pharmaceutical Industry (ABPI) - the lead industry negotiator on the VPAS scheme.
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. 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 depends on the difference between the allowed annual growth in sales to the NHS of branded medicines and what is actually spent. The rebate is going to be 26.5% in 2023. This is well above historic numbers, and leaves the UK as an outlier compared to other countries. No other industry is facing this sort of punishment caused by its success in bringing increasing innovative products to the market.
There have been warnings recently from Mark Samuels, the Chief Executive of the British Generic Manufacturers Association (BGMA), that branded generics companies were having to withdraw products as the operating environment is simply unfeasible. Meanwhile, Leslie Galloway, Chair of the Ethical Medicines Industry Group (EMIG), warned that a survey showed that 50% of its members were reducing supplies of medicines in 2023 and a further 40% were discussing a reduction. Then, we heard that two big pharma companies - Eli Lilly and AbbVie - were leaving VPAS and would instead supply medicines on the statutory pricing scheme for branded medicines - which shows how unappealing the voluntary scheme has now become.
The current pricing scheme is sending shockwaves through the industry and will impact the patient community and their families if medicines are withdrawn from the supply to the UK. It will also affect the growth plans for the economy.
Part of the problem is that industry has not been able to plan, because the rebate amount has got worse in each year of the current five year scheme, rather than being set at one fixed rate for the five year period.
David Watson said no one could have foreseen the level of growth in medicines, which has been fuelled by the pandemic. The cap mechanism was broken, and industry perceived its payments were going into a black hole. The financial contribution required from industry was a disincentive to companies to maintain supply, launch new medicines and invest in the UK. On the other hand, a new agreement could be successful if it supported the Life Science Vision whilst allowing industry to grow in the UK.
Leslie Galloway said a big part of the problem is that, regardless of total spend on healthcare, the UK languishes behind other Western countries on the percentage of healthcare spending that is on medicines. This means there is less in the pot to give to pharma. Typically, the UK spend on medicines is 9% of healthcare spending, compared to double that in other countries.
David Watson is calling for a completely new deal - a clean slate. He thinks the Government is open to ideas. However, will they accept what is needed in his view - which is to match other markets? The benefit to the UK would be huge with a growth and R&D dividend.
Leslie Galloway wants to see three things: (1) stability; (2) predictability; and (3) viability. This is what is needed to persuade global bosses to locate in the UK. He would also like to see an independent review for how medicines are delivered in the UK.
They are both calling for Government to prioritise and listen to the needs of pharma. For any new scheme to have worked, the majority of participants will have to see it as a better option and sign up to it, as it is a voluntary scheme. If they do not, that will be proof in itself that it has not worked.
They both accept that pharma cannot just plead with the Government for more. They need to show there is an economic case - that pharma will stay in the UK, ensure patients have new medicines and invest here.
The current VPAS scheme will end in December 2023, and the ABPI and Government are now negotiating the new scheme from 2024, so there is a chance to start again soon.
Industry have been engaging with the Government and they are getting warm signs suggesting that they are being listened to. The UK Government has hailed the life sciences as a key industry for the UK to achieve growth in health and wealth of the country.
Leslie Galloway said there is still much that makes the UK highly attractive to pharma if the voluntary pricing scheme can be solved. The UK has the Health Research Authority, a leading regulator in the Medicines and Healthcare products Regulatory Agency (MHRA), the best health technologies assessor in the world in the National Institute for Health and Care Excellence (NICE), and the NHS with 67 million patients as a hotbed for research.
David Watson echoed Leslie's optimism, believing there has got to be a better future than the current broken system and there looks to be political support. "UK as a leader in life sciences" is a message that seemingly has traction with the Government.
We will have to await the outcome of those negotiations for the new scheme. There seems to be signs of optimism for the future, but there is a lot to thrash out in just a few months.
At the invitation-only PING Conference, which VWV will be holding on 19 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. Presenters will include David Watson, Leslie Galloway and Mark Samuels.
Other themes at this year's PING Conference will include issues over regulatory approvals, skills and space.