Pharma furious as UK Statutory Scheme rebate rate soars

The UK pharma sector has reacted with consternation to the news that the government is proposing to raise the Statutory Scheme payment rate from 15.5% to 32.2% of companies' NHS sales in the second half of this year.

The Association of the British Pharmaceutical Industry (ABPI) warned that the proposal, which comes alongside a sharp rise in the rebate rate for the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG), is threatening growth and investment in the UK life sciences industry.

The two schemes set a yearly cap on the total allowed sales value of branded medicines to the NHS each year, with sales above the cap paid back to the government via a levy.

Most companies opt for the voluntary scheme, although a massive increase in the rebate in the last few years prompted some to opt out and switch to the statutory scheme in protest. The ABPI estimates that only around 2% of the total branded medicines market is subject to the Statutory Scheme, and the VPAG "tends to have enhanced terms and marginally lower rates."

Nevertheless, the rise in the Statutory Scheme rate to almost a third of pharma company revenue – which brings the average for the year to 23.8%, roughly in line with the 22.9% levied via the VPAG – is undermining the UK government's efforts to make life sciences a foundation of its industrial strategy.

"We need an urgent ministerial commitment to work with industry to get the UK back to an internationally competitive position," said ABPI chief executive Richard Torbett, who pointed out that comparable sales rebate rates in Germany (7%), Ireland (9%), and France (12%) show that the UK is outside international norms with its policy.

ABPI also repeated its often-asserted comment that the UK invests a smaller share of overall healthcare costs on medicines than comparable countries, at 9% compared to 17% in Germany and Italy and 15% in France.

"There is a real risk the rates continue to increase beyond record levels for years to come – unless ministers intervene to fix the broken system," said the trade organisation.

"The result of limiting government expenditure on branded medicines at levels far below NHS need has led to long-term disinvestment in medicines, while the costs to industry has increased exponentially," it added.

"Most recently, this has been exacerbated by a rapid expansion of NHS spending, without any corresponding increase to allowed spending on medicine."

Earlier this month, the ABPI published a white paper that urged the government to put medicines at the heart of the NHS 10-year plan as a 'fourth shift' in the government's much-anticipated 10-year plan for the health service, along with moving care from hospitals to the community, embracing digital technologies, and focusing on disease prevention rather than sickness.