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VPAG Heads of Agreement Reaction

Mark Samuels, Chief Executive of Medicines UK, said:

"Earlier this year, we published plans for a price erosion mechanism (PEM) as we believed it was the simplest way to safeguard the supply to the NHS of off-patent medicines, which represent the vast majority of prescriptions used by UK patients. While we are pleased this principle is at the heart of the new deal, we are very disappointed that the PEM appears to damage competition because of how the reference price is calculated; it will reduce the plurality of medicine suppliers for the NHS, increasing the drug shortage risk. We were not made aware of this reference price calculation despite requests for more information from all parties. If apparent in the final agreement, the reference price calculation is a high hurdle for the generic and biosimilar sector, hampering the supply of these medicines to the NHS.

"We are also concerned by the scheme using an originator product's SPC status to confer whether a generic or biosimilar medicine that launches is defined as a new or older product. Conflating intellectual property status with a tax is a recipe for disaster. It means paying a potentially different rate and may encourage originators to add complexity to a product's IP status to delay the onset of competition. This could mean the NHS paying millions more for some medicines than it needs to. To limit this possibility, the final VPAS document must explicitly clarify that the main product SPC is relevant.

"There remain other areas of detail that we need to better understand to ascertain whether this is a fair deal for the whole industry and patients. More broadly, while it is heartening to see an increase in the overall growth rate, we are concerned that with next year's level still at 2% there is a continuing risk of increased medicine shortages. We also want to see more details on the proposed industry-funded investment facility worth £400m over five years. This references, among other things, manufacturing, and we need to see this made available to off-patent companies as well; otherwise, the government will have missed an ideal opportunity to mitigate the considerable jeopardy to generic medicine manufacturing in the UK."