Show Me the Money: First New PPRS Payments in UK

The Pharmaceutical Price Regulation Scheme (PPRS) is a long-standing scheme where the pharmaceutical industry, represented by the Association of the British Pharmaceutical Industry (ABPI), negotiates with the Department of Health (DH) to agree how to indirectly manage the price of branded medicines.

Its latest incarnation includes a brand new feature. Instead of headline price cuts as seen in previous schemes, this time it includes a guarantee for the National Health Service (NHS) that spend on branded medicines won’t go over a pre-agreed amount. That amount is linked to an allowable growth rate on an agreed baseline spend: 0% for 2014 and 2015, and 1.8%, 1.8% and 1.9% for the last three years of the scheme. Any spend over that means companies have to make PPRS payments to DH.

And those first payments have now been made – with DH receiving £74 million at the end of the first quarter of 2014. That means a better balance sheet for the Department, who will then cascade money to the four devolved nations and in England, add to monies given to NHS England (NHSE).

Of course for companies, this is a dent in their UK cash reserves, but it may well be better than the 15% headline cuts for companies who opted out of the PPRS and are therefore caught up in the Statutory Scheme for Branded Medicines. Not to mention avoiding international price referencing spillovers too.

Questions remain regarding the payout’s facilitation of better access to innovative medicines and its impact on prescribing decisions. NHSE says “Advice for 2014/15 is that commissioners have received the expected level of funding to cope with growth in the cost of branded medicines….The focus should shift from cost-saving onto securing better patient outcomes and value through medicines optimization and commissioners should disengage from cost-containment measures that will not ensure value for money or patient benefit for the system as a whole.”

But then it adds: “This does not override the requirement to control expenditure within the annual budget.” Which could be interpreted as, spend a little more than usual, but not too much!

We’ll have to wait and see whether patients see the benefits of the new money.

Leela Barham (leels@btinternet.com) is an independent health economist who blogs athttp://leelabarhameconomicconsulting.blogspot.co.uk