News & Events

Update on the PPRS: What’s changed (besides the name)?

Last Reviewed 20/02/2019

By Toni Qualey

The Pharmaceutical Price Regulation Scheme (PPRS) is a voluntary agreement between the Department of Health and the Association of the British Pharmaceutical Industry (ABPI) concerning the supply of licensed, branded medicines to the NHS.

The scheme is designed to provide stability and predictability to government and industry by capping the growth of spending on branded medicines, as well as implementing various price controls and incentives for innovation.

WHAT’S NEW WITH THE PPRS/VOLUNTARY PRICE REGULATION SCHEME?

The previous PPRS expired on 31 December 2018, after which a new scheme (renamed the ‘Voluntary Scheme for Branded Medicines Pricing and Access’) has taken effect.

Like the previous PPRS, the new scheme is two-fold. It sets out:

  • a range of measures to improve innovation and access to medicines
  • an affordability mechanism

There are, however, a few main differences:

MEASURES TO IMPROVE INNOVATION AND ACCESS TO MEDICINES

  • All new medicines will be appraised by NICE, as of April 2020. In the meantime, the capacity of NICE technology appraisals (TA) will increase to meet this aim. The capacity of NICE Highly Specialised Technology (HST) appraisals is not set to increase significantly.
  • The speed of NICE appraisals will be improved so that non-cancer medicines will be appraised as quickly as cancer medicines. This will potentially speed up the process by up to six months, but only where there is sufficient evidence to enable a rigorous appraisal. Demonstrating sufficient evidence is a key problem for rare disease medicines.
  • NICE value assessment methods will be reviewed in 2019/20; it is most likely that the STA process will be reviewed in 2019, and the HST in 2020, though this is yet to be confirmed. The TA cost-effectiveness threshold will remain but the NICE HST threshold may change.
  • The new scheme aims to improve the uptake of commissioned medicines by engaging and supporting companies earlier in the process, to ensure clinicians and NHS infrastructure are prepared for the introduction of new medicines. NICE and NHS England will together develop and implement a joined-up approach to earlier engagement and case management, working closely with industry. This approach will apply to medicines with the strongest value propositions.
  • There will be a single, shared approach to horizon scanning, and a single route for companies to engage with NHS and government through. This will be linked to the most transformative medicines.
  • The new scheme aims to improve the development of data infrastructure in the health service in England (e.g e-prescribing), to enable improved information collection and generation of ‘real world’ evidence. The scheme also includes a commitment to develop tools to track and assess the uptake of new products and impact on patients outcomes (e.g. Innovation Scorecard).
  • The new scheme will accommodate greater commercial flexibility “for the best value medicines”, and aims to improve the efficiency of commercial agreements throughout the UK by allowing confidential commercial arrangements to be shared across the four devolved nations, to reduce duplication.
  • The scheme includes a commitment to produce a commercial framework, which will reinforce financial commitments. This will outline a decision making framework for commercial negotiations, but for commercial discussions, so that expectations can be managed. This aims to be a much more formalized and systematic way of settling upon price, than is currently available.
  • The new scheme will show how money provided through rebates is dispersed.

AFFORDABILITY MECHANISMS

  • Lastly, companies will continue to make payments based on net sales, but now overall growth on NHS-branded medicines sales will be capped at 2% per year (rather than 1.9% in the previous scheme). According to forecasts of expected sales, the payment rate for companies will be 9.6% in 2019, with subsequent years’ payments to be determined by actual sales growth. In addition, there will be a rolling 36-month exemption from payments for new active substances, and a significantly improved exemption for smaller companies, to promote innovation.

Crucially, the new scheme does not deviate significantly from the previous PPRS. The budget impact test and highly specialised technologies cost-effectiveness thresholds will remain. Moreover, rebates will continue to allocated to the wider NHS by the Department of Health.

HOW DOES THIS COMPARE WITH THE ALTERNATIVE?

In total, 97% of British industry signed up to the previous PPRS. The remaining 3% of companies, that did not choose to join the PPRS, were covered instead by the equivalent statutory scheme, which is the only alternative.

The statutory scheme has recently changed (as of 3 December 2018) to align with the new Voluntary Price Regulation scheme. The key points of the new scheme are as a follows:

  • The scheme will no longer include a fixed price threshold, over which rebates are paid, but instead will operate using an allowed growth of sales like the PPRS. Companies will be expected to provide a rebate to cover sales which exceed this allowed growth.
  • The allowable growth rate is set to 1.1% from the expected 2018 baseline of relevant sales. Rebate payments are calculated as the difference between allowed growth rate and forecast growth rate, divided by the forecast relevant sales. According to current forecasts, and the allowed growth rate, companies will expect to pay 9.9% of profits in 2019, 14.7 in 2020 and 20.5% in 2021 in the new Statutory scheme.

RESOURCES

Find the consultation on the new Statutory scheme, and supplementary info, here.

Find the policy paper for the new Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) here.

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