Consultation outcome

Proposed update to the statutory scheme to control the cost of branded health service medicines

From:: Department of Health and Social Care
Published: 18 March 2024
Last updated: 18 October 2024 — See all updates

Read the full outcome

Consultation response

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Impact assessment: update to the statutory scheme to control the cost of branded health service medicines

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Detail of outcome

There were 30 responses to this consultation. The majority (87%) of these responses were from pharmaceutical companies or trade bodies.

Following detailed consideration of consultation responses, the department has decided to maintain broad commercial equivalence with the voluntary scheme by implementing the following changes:

adjusting baseline sales in the statutory scheme by £150 million in 2025, £330 million in 2026, and £380 million in 2027
introducing a differentiated approach to setting payment percentages for newer medicines and older medicines
setting the headline payment percentage for newer medicines at 15.5% in 2025, 17.9% in 2026 and 20.1% in 2027
setting the basic payment percentage for older medicines at 10.6% in 2025, 11% in 2026 and 10.9% in 2027, with a top-up payment percentage for older medicines of between 1% and 25%, if applicable, based on the level of observed price erosion from a reference price
introducing exemptions to the top-up payment percentage for relevant plasma derived medicinal products and company sales that total less than £1.5 million of a health service medicine in a particular virtual therapeutic moiety (VTM) each year
increasing the exemption threshold from scheme payments for small companies, from sales below £5 million to sales of less than £6million

Due to delayed implementation and subsequent availability of Q1 2024 sales data (leading to revisions in forecasts for newer medicines and parallel import sales), the payment percentages that the department intends to implement are different to those consulted on. Additionally, these figures extend to 2027 to reflect scheme implementation from Q1 2025 as opposed to Q3 2024.

More information on why these changes were required can be found in Annex G of the accompanying impact assessment.

The policy intent has not changed.

Original consultation

Consultation description

The statutory scheme is set out in legislation in The Branded Health Service Medicines (Costs) Regulations 2018. It is one of 2 schemes, alongside the 2024 voluntary scheme for branded medicines pricing, access and growth (VPAG), that control the costs of branded medicines to the NHS. VPAG was agreed in late 2023 and replaced the 2019 voluntary scheme for branded medicines pricing and access from 1 January 2024.

The government is proposing updates to the statutory scheme to maintain broad commercial equivalence with VPAG. The consultation proposes to introduce a differentiated approach to setting payment percentages for newer medicines and older medicines, and includes proposals on:

defining older and newer medicines
setting the headline payment percentage for newer medicines
setting the basic payment percentage and top-up payment percentage for older medicines
calculating the price decline of older medicines

The consultation also proposes increasing the threshold for an exemption from scheme payments for small companies.

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