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Drug pricing

Government cap on branded medicine prices may be unsustainable, warns ABPI

An ongoing cap on the price of branded medicines to the NHS “may not be sustainable” in the long term, the Association of the British Pharmaceutical Industry (ABPI) has said.

David Watson, director of pricing and the pharmaceutical pricing regulation scheme at the ABPI, issued the warning at a Westminster Health Forum event on pharmaceutical pricing and access to medicines, held on 25 April 2019.

In the latest version of the government’s current voluntary scheme for branded medicines pricing and access, which came into effect on 1 January 2019, a 2% cap was placed on the growth in prices of branded medicines to the NHS, with pharmaceutical companies repaying the NHS for any growth above that limit.

The previous voluntary scheme, which is renegotiated every five years, capped the growth of prices at 1.1%.

Despite the cap increase, Watson said the government and pharmaceutical industry will need to “think about what happens in future — [about] how we replace this type of deal, because it does get to the point potentially for both sides that we see essentially a cap on medicines spend may not be sustainable long term”.

Speaking to The Pharmaceutical Journal, Watson warned that the pharmaceutical industry could reach a point where it cannot afford to adhere to the price cap. He further explained that although it was not impossible for the price cap to be sustainable, he said it may be sensible not to try to keep pricing “as flat as possible” when the pharmaceutical industry negotiates the next pricing scheme with government.

Watson added that “we don’t know” whether sustaining the cap would lead to some companies withdrawing their product or withdrawing from the voluntary scheme entirely. 

The voluntary pricing agreement is expected to save £930m from the NHS medicines bill in 2019.

Citation: The Pharmaceutical Journal DOI: 10.1211/PJ.2019.20206472

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