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New pharma deal raises cap on drugs’ spending

The government has negotiated a new deal with the pharmaceutical industry which raises the NHS’ cap on spending on branded medicines.

The Department of Health and Social Care and the Association of the British Pharmaceutical Industry have reached a deal for a voluntary scheme for Branded Medicines Pricing and Access, which places a 2 per cent annual cap on the growth in sales of branded medicines to the NHS.

The deal replaces the Pharmaceutical Pricing Regulation Scheme, which started in 2014 and ends in December. Under the PPRS, growth was capped at an average of 1.1 per cent each year, which represented a real terms cut.

The new deal would come into effect from January 2019. Pharmaceutical companies will be expected to repay the NHS for spending above the cap, which the DHSC suggested would total around £930m next year.

The DHSC said the deal will also include:

  • NHS funding for all medicines recommended for use by the National Institute for Health and Care Excellence;
  • faster assessments of the clinical and cost effectiveness of all new medicines; and
  • early engagement with companies to ensure clinicians and the NHS infrastructure are ready to use new medicines.

Health and social care secretary Matt Hancock said: “Cutting-edge and best value medicines will be fast-tracked and we will cut our medicines bill by £930m next year following tough but constructive negotiations with the pharmaceutical industry.”

Mike Thompson, chief executive of The Association of the British Pharmaceutical Industry, said the agreement means that people across the UK should see “better and faster access to the most effective new medicines and vaccines”.

“Under the scheme, the NHS will have absolute certainty that the sales of branded medicines will not grow by more than 2 per cent in any of the next five years – or industry refunds the money,” Mr Thompson said.

Simon Stevens, chief executive of NHS England, said: “As the UK’s position on Brexit is finalised, it is pleasing to be able to provide multiyear certainty to both the NHS and the life sciences sector given its importance to the British economy.”

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