Value-Based Pricing: Too High a Price for UK Pharma? - Pharmaceutical Executive

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Value-Based Pricing: Too High a Price for UK Pharma?


Pharmaceutical Executive


Politicized medicine

This scenario, of course, runs counter to the government's pledge that VBP will boost patient access to new useful medicines. But, for Healy, VBP's retention of cost-effectiveness thresholds means that the concerns many patients have about being denied treatments are likely to continue anyway. "These thresholds can be a particularly useful tool for policymakers," he says, "but in truth they are a fairly clumsy one-size-fits-all method of assessing value." Their arbitrary nature, he argues, will continue to establish indelicate fine lines between patients being treated or not.

The current system, with NICE as the gatekeeper for determining routine NHS access to medicines "has some teeth in that there is a mandatory funding direction in place, which requires PCTs [primary care trusts] and local NHS organizations to make the medicine available," says Catchpole. But even with this system there is variation when it comes to consistency of uptake and access to medicines. "If it's a problem now it is certainly likely to continue to be one in any new system of value-based pricing," he adds.

As for the loss of NICE's role within the system, there is a fear that the government's proposed method of evaluation will be far more subjective than the one NICE currently uses, and one that is much more open to influence. For NHS blogger Nigel Edwards, this will put politicians back into the process, allowing for "horse trading" and less transparency.

Ed Schoonveld, Market Access & Pricing Practice leader at ZS Associates, told Pharm Exec that "the NHS seems to be looking for more flexibility to avoid negative reactions to NICE rulings, particularly in oncology and other therapy areas where there have been strong patient group and media reactions." But he admits that that flexibility "will in all likelihood also reduce transparency."

The new scheme will essentially move to a price-making approach. According to industry consultant Leela Barham, the price that the NHS is willing to pay will be clearer; companies can either accept that price, provide evidence to convince the NHS to pay more, or justify why they won't lower their price. But if VBP is intended to help combat the problem of NICE currently saying "no" to expensive drugs, Yorkshire Cancer Network's David Thomson adds that it will also no longer be able to say "yes." "There is nothing in the proposals which says that GP consortia have to pay for drugs priced at the VBP price," he adds.

But it is not lost on any observer that instead of putting NICE on the hot seat when it recommends denying access to a drug, the new regime will put the onus back on industry—patients will be knocking on company doors for that essential explanation of why a price doesn't measure up to bringing it to market.

The government is also neglecting the confidence factor in terms of what is lost by the disappearance of the PPRS. "PPRS was a voluntary, negotiated system agreed by joint consensus of the parties, largely in private. It looks like this element will be lost," says Schoonveld. "I don't see how global drug companies will be able to voluntarily accept the price-control nature of VBP." Healy reminds us, however, that the PPRS was "never an ideal arrangement," given that it involved behind-the-scenes negotiations between manufacturers and policymakers. "The problem," he says ironically, "is that it seems to work."

Over its 55 years, the PPRS, in the opinion of the industry and many other observers, was predictable as well as flexible. It regulated not product price but overall profit of the firm, so that companies could set their own prices as long as the return did not exceed an agreed company-wide ceiling. It allowed companies to know in advance what sort of returns they could expect from sales within the NHS and adjust these in response to a product's performance. Although price cuts did lately figure in to the PPRS, having been imposed as part of the last two PPRS negotiations, there was a basic assurance to industry that no further actions on price would be taken over the lifetime of the five-year pact. "This exempted the UK from the ad hoc, arbitrary price cuts or givebacks seen in other European countries," Healy said.


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