The British Generic Manufacturers Association (BGMA) has backed the UK government’s proposed changes to the Statutory Scheme for branded medicines, which includes a ‘Life Cycle Adjustment’ (LCA) mechanism to permit a lower rebate rate for medicines sold in competitive markets. The association underscored the necessity for crucial amendments to forestall unintended consequences and ensure a practical alignment with market operations.
A precisely tailored approach is crucial in ensuring sustainability and growth in this sector, the BGMA said in a statement on Oct. 11. The Department of Health and Social Care is currently working on the successor to the 2019 voluntary scheme for branded medicines and pricing access (VPAS) agreement, slated to end in 2023. Negotiations for this successor, scheduled to begin on January 1, 2024, are already underway.
“We are pleased that the Statutory Scheme consultation recognises that branded generic and biosimilar medicines are subject to different market dynamics and competitive pressures,” said Mark Samuels, Chief Executive of BGMA. “As such, a one-size-fits-all approach across all branded products is not suitable for the next five years. It is crucial to adopt a precisely tailored approach to this sector, ensuring both sustainability and growth.”
- Raising the permitted growth rate, leading to adjustments in payment percentages.
- Modifying the criteria for exempting sales of branded medicines from scheme payments.
- These changes could be enacted within the existing statutory scheme framework or in conjunction with a new strategy aimed at managing expenditure on older branded medicines (referred to as the ‘lifecycle adjustment’).
Off-patent products face competition, often reducing NHS payments to approximately 10 per cent of the original price, the BGMA said. Branded generics and biosimilars also grapple with the added cost burden of voluntary or statutory scheme rebates, which constitute a substantial share of revenues.
This renders these products economically challenging for many manufacturers, the statement added.
Samuels said that branded generics and biosimilars make up nearly 40 per cent of all branded medicines sold by volume, yet represent only 17 per cent of the cost. “Consequently, we fervently endorse a distinct method of seeking contributions from the branded pharmaceutical industry. We stand in support of the proposal outlined in the Statutory Scheme consultation,” he added.
‘Negotiating the terms’
Meanwhile, the terms of the next voluntary scheme period of 2024 to 2028 is currently being negotiated between the DHSC, NHS England and The Association of the British Pharmaceutical Industry. If consensus is not achieved, the statutory scheme will kick in automatically at the start of the upcoming year.
“While we appreciate several elements of the statutory scheme, there should be a more adaptable definition of competition,” Samuels said. “The current articulation poses a risk of stifling innovation and hindering the availability of improved treatments for patients. There should also be recognition and accommodation for situations where older products, by choice, bear a brand and operate in competitive markets, contributing to NHS savings.”
Samuels also warned that restricting a lower rate solely to instances with a regulatory brand requirement could result in the NHS forgoing substantial off-patent savings and potentially exacerbating shortages.
Additional areas needing attention include the time required in primary care for new entrant manufacturers to increase their market share and qualify for the discount rate. “A one-year timeframe may not be adequate.”
Furthermore, “careful consideration is required for the functionality of the proposals in secondary care tendering, where suppliers need to know the rebate level before bidding,” he added.
A member survey
Meanwhile, BGMA conducted a survey among its members as part of its consultation response. The results indicated that without adjustments to the current LCA proposals, 55 per cent of members supplying choice-branded products would reduce their current supply levels. Additionally, over a third (36 per cent) would cease all new launches in the next two years.
In terms of biosimilars, 86 per cent of those surveyed stated they would postpone new launches, while 82 per cent of regulatory branded generic suppliers would do the same.
However, the majority of respondents (67 per cent) hold the belief that the LCA proposals surpass the flat variable rate alternative listed in the consultation. Only 16.5 per cent are against, while another 16.5 per cent remain unsure.
In July, BGMA expressed concerns about the considerable implications for future supply due to the restrictive VPAS rate. This warning followed the dismissal of the association’s judicial review regarding the Government’s decision to exclude it from full participation in negotiations for the upcoming five-year VPAS period.