The Associate of the British Pharmaceutical Industry (ABPI) announced on 16 January that two global pharmaceutical companies, Eli Lilly and AbbVie, have withdrawn from the UK’s Voluntary scheme for branded medicines pricing and access (VPAS).
What is VPAS?
VPAS is a rebate scheme that was negotiated between the ABPI and the UK Government, relating to branded medicines including branded generics. It aims to keep increased costs of branded medicines for the NHS to no more than 2% per year. VPAS also aims to improve access and uptake of innovative medicines.
Is VPAS really voluntary?
Manufacturers of branded medicines that choose not to join VPAS are automatically placed into the Statutory Scheme for Branded Medicines under the Branded Health Service Medicines (Costs) Regulations 2018, which has a similar reimbursement scheme. The reimbursement rate under VPAS has historically been slightly lower than that under the statutory scheme, incentivising participation in the 'voluntary' scheme. There are also nuances under VPAS which can be advantageous for some manufacturers compared with the statutory scheme.
What has changed?
The statutory scheme rate has been set at 24.4 % for 2023, whereas the UK Government announced in December 2022 that the VPAS rate would increase from 15% to 26.5% for 2023. The UK is now seen as an outlier for requiring reimbursement at this level (although Italy has rebate rates of up to 50%), with Eli Lilly and Abbvie commenting publicly that the scheme is harming innovation and investment in the UK.
What's next?
The current VPAS scheme runs until the end of this year so is due for renegotiation in any event, on its usual five-yearly cycle. It will be interesting to see whether other manufacturers of branded medicines choose to withdraw from the voluntary scheme and whether the basis and operation of the statutory scheme also comes under pressure. There is also potential for manufacturers to cease selling in the UK altogether if the margins available are no longer commercial. Keeping the increase in the NHS branded medicines budget to 2% per year appears difficult to sustain given that the medicines bill for the NHS has, for a variety of reasons, increased by significantly more than 2% during and following the COVID-19 pandemic.
