In brief
The UK’s Department of Health and Social Care has announced that the voluntary scheme payment percentage for 2023 will be set at 26.5% of sales for 2023 (representing almost GBP 3.3 billion). This is a further major increase to last year’s VPAS significant rate rise to 15% (around GBP 1.8 billion, rising from GBP 0.6 billion in 2021).
The Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) is an agreement between the DHSC, NHS England and the Association of the British Pharmaceutical Industry. A key objective behind VPAS is to support innovation and bolster the success of the life sciences industry, as well as ensure patients in the UK are able to continue to access the most effective medicines at the best value possible. However, industry bodies such as the ABPI warn that the sharp rise in the repayment percent risks “actively harming the UK’s life sciences ecosystem”. This echoes the sentiment among large pharmaceutical players who have issued public statements condemning the high repayment rate, as it risks companies deprioritising the UK for R&D.
The ABPI notes that the revenue clawback comes on top of other rising business taxes and increasing costs of doing business in the UK, and that the 2023 rate is more than double that of any comparable country. Richard Torbett, Chief Executive at the ABPI, stated “following the pandemic, the existing system has been forced beyond breaking point and is now well outside anything seen elsewhere in the developed world. The life sciences industry has the potential to be the wind in the sails of a UK innovation-led recovery, but in the face of this storm risks blowing us backwards”.
Despite the sharp repayment percentage increase, the UK government continually ensures that VPAS remains marginally more attractive (or just less unattractive) for pharmaceutical companies marketing medicines in the UK than its counterpart, the Statutory Scheme. The (DHSC has proposed to set the payment percentage for 2023 at 27.5% for the Statutory Scheme.
Members of the VPAS scheme are now thinking ahead to the negotiations for the next five-year deal once the present deal expires at the end of 2024. It seems clear that setting the payment percentage for 2024 and the likely overhaul of the VPAS for the next term will be a key priority for the industry and the ABPI into the new year.
The UK government press release is available in full here.
For further information and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.
