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UK Pricing of Branded Medicines:
Getting (And Raising) Your Price Right

Context

The UK remains an attractive launch market for branded medicines; the list price (i.e. official price) is negotiated without referencing other countries, with reimbursement leaving scope for confidential discounting. This means that the NHS actually pays less for the product, whilst the company is able to achieve a commercially sustainable list price which will later be referenced, and considered, in other markets globally.

UK Pricing System

The UK operates a centralised pricing system, with a single list price for each branded product across England, Wales, Scotland and Northern Ireland.

In order to keep the NHS budget affordable, the Department of Health and Social Care (DHSC) has imposed limits to control how much annual growth in NHS drug spending can increase. Any excess above these levels is to be repaid to DHSC by pharma companies as a percentage of their revenue .

There are two repayment schemes in the UK : 

• the Voluntary Scheme (VS), negotiated between the Association of the British Pharmaceutical Industry (ABPI) and the DHSC every five years, with the repayment percentage currently set at 5.9%; and

• the Statutory Scheme (SS), applied when a company is not part of the VS, with the repayment percentage set by the UK government which is currently at 7.4%. 

Westminster

Although the schemes are broadly aligned, in practice most of the companies are members of the VS. This is probably because of the VS’s generally more favourable terms, including a higher allowed growth in spend which is certain for a fixed term. The SS, on the other hand, may change at any time subject to Parliamentary approval. 

Key considerations when applying for a price (or its rise)

• The process in theory

Seeking a price (and price rise) for branded medicines should begin by submitting a letter to the DHSC’s Branded Medicines Team. The content required is largely the same under both schemes and focuses on financial information . In addition, applications under the SS should also include details on the clinical need; comparator costs; global list prices ; date of (latest) patent expiry; and the total NHS sales for the current/previous year.

The process is much more straightforward under the VS when the product is a New Active Substance. As these can be priced at the company’s discretion on entering the UK market , the only rule to observe here is notifying the DHSC of the product’s details, and obtaining confirmation of the freedom of pricing.

On the other hand, a price rise will only be considered by the DHSC in limited circumstances, for example when comparator products are priced higher, or when the company can demonstrate improved clinical data.

• The process in practice

Whether making the first application or requesting a price rise, a good way to start the pricing negotiation is through an informal discussion with the DHSC. For one, it can shorten the process and reduce associated workload by scoping out what is actually needed for the official application process.

Another benefit is that these meetings seem to have a consistent record of being useful. In MAP’s experience, no risks have presented in taking this preliminary step, and the DHSC team have even proposed solutions to challenges identified. On the other hand, we have not seen cases of ‘discovery’ of facts that would have been used later in the process against companies.

  • Disagreeing on a price with the DHSC

    Although in theory the price is achieved through negotiation between the company and the DHSC, it is the DHSC that has the final say. But, as with every process, there is an option to appeal.

    Under both schemes, the initial decision of the Pricing Committee can be escalated to the Decision Committee. From there, the SS member company is really limited to judicial proceedings, whilst the VS members can additionally trigger the Dispute Resolution process – a mediation facilitated by a panel chosen by the DHSC and ABPI (i.e. the industry).

    In any case, in MAP’s experience the key to a successful outcome is a dialogue; informal discussions with the DHSC allow for presenting additional arguments, and explaining any clarification points. Whilst the outcome may not be exactly as hoped, it is highly likely that the discussions will lead to an improvement from the DHSC’s original position. And, they will almost definitely achieve a much more positive, and quicker, result than if the company triggered the official escalation process.

Tessa

Angelika Gornikowska

Legal Counsel

 angelika@mapbiopharma.com

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