Could the PPRS support a changing growth and innovation agenda?

Views & Analysis
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In the final part of a series of five articles looking at the current Pharmaceutical Price Regulation Scheme (PPRS), Leela Barham focuses on whether it has achieved the goal of supporting the government’s growth and innovation agenda.

The Pharmaceutical Price Regulation Scheme (PPRS) is a voluntary agreement between the Association of the British Pharmaceutical Industry (ABPI) and the UK government, represented by the Department of Health (DH) in London.  In previous articles in this series I have examined PPRS objectives such ensuring affordability and reducing bureaucracy and duplication. In this article, I am addressing the PPRS' fifth and final objective: to support the government’s growth and innovation agenda.

Growth and innovation agenda

The 2014 PPRS makes it clear that encouraging innovation and development of high-value treatments is a benefit for patients. It also discusses promoting a strong and profitable industry that is both willing and able to invest in sustained research and development. So far, so laudable.

When the 2014 PPRS was negotiated, the government’s growth and innovation agenda was set out in the 2011 report Innovation, Health and Wealth (IHW) as well as the 2011 Strategy for UK Life Sciences. Under IHW, innovation was seen as a way to meet the wider challenges of finance and increasing demands on the NHS. Under the Strategy, life sciences was seen as a way to contribute towards a sustainable economic recovery; also recognising that the UK competes with other countries as a location for life sciences.

IHW included a number of actions that have stood the test of time: the set up of 15 Academic Health Science Networks (AHSNs), the NICE Implementation Collaborative (NIC), the Innovation Scorecard as well as the Clinical Practice Research Datalink (CPRD). Others didn’t, such as a specialised services commissioning innovation fund, which was later abandoned. NHS England (NHSE) describes AHSNs as ‘the centrepiece in our NHS innovation architecture’. When launched in 2013 they had four aims:

  1. Support the needs of local populations
  2. Foster a culture of partnership and collaboration
  3. Generate wealth through working with industry
  4. Speed the adoption of innovations.

The Strategy also had a number of actions that have remained; the Early Access to Medicines Scheme and improvements to the UK Clinical Trials Gateway are examples.

Commitments within the 2014 PPRS

Aside from commitments under the Access and Outcomes chapter (covered in a companion piece looking at improving access), the main mechanisms to deliver on the ambition to support the government’s agenda include:

  • Requirements in the Mandate to NHSE. The Mandate essentially sets out what the DH expects from NHSE and, through their leadership, the wider NHS.
  • A commitment that NHS bodies will retain their responsibilities to promote innovation as set out in the 2013 Health and Social Care Act (there are responsibilities for research too in the Act).
  • A commitment that AHSNs will work with the industry.

There are also innovation allowances that operate as part of the PPRS profit control, just as there have been in the past.

Goals stay the same, but landscape changes

Things have inevitably changed since the 2014 PPRS was agreed. Brexit is the obvious one, and that has led to the Green Paper from the government, Building our Industrial Strategy, in January 2017. This set its sights high for life sciences by aiming to make the UK the best place in the world to invest in life sciences. The commitment for an early sector deal continued with the publication of the Life Sciences Industrial Strategy in August 2017.

This 2017 life sciences strategy should underpin discussions between industry and government in general terms, although the strategy didn’t include pricing explicitly within the scope of the report. That didn’t stop it from name-checking some important pricing issues, including a wide range of commercial arrangements: volume-based pricing, outcomes-based pricing, indication-specific pricing and methods which leverage assets in the NHS other than price, e.g. time, data, access. There’s also discussion of flexible funding and reimbursement vehicles as well as commercial discussions and flexible and confidential reimbursement and contractual arrangements. It’s not clear what they mean in practice though.

The strategy also names the Accelerated Access Review (AAR), which looked at how to get the NHS to take up ‘good’ innovations and reported in October 2016. Just some of the 18 recommendations made include: a transformative designation for the most promising innovations; an accelerated pathway for the transformative innovations; NICE to review its methods and processes and an Accelerated Access Partnership (AAP).

In November 2017, the government also published its UK Industrial Strategy including the Life Sciences Sector Deal. This sets out intentions to boost public R&D funding and make clinical trials easier in the NHS, as some of the measures to keep industry in the UK or, even better from the government’s perspective, bring in new investment.

The life sciences deal builds on the small steps made to implement the recommendations in the AAR. New funding was announced for AHSNs and funding for SMEs to test their technologies in real-world settings and a Pathway Transformation Fund to help the NHS integrate new tech into practice back in July 2017. The Life Sciences Sector Deal sees government committing to implement the AAR, as it said before. The Life Sciences Industrial Strategy went further, calling for the AAR to be adopted and adding that a streamlined access framework should be "part of a holistic medicines policy with a leading role for NICE and including a new voluntary agreement as a successor to the current agreement [the 2014 PPRS]". This is missing in the Sector Deal.

The Life Sciences Industrial Strategy also said that the PPRS should have an overarching principle that ‘balance[s] patient access to new medicines, value for money for the NHS and the need to incentivise industry to invest in research and development for the next generation of innovative products’. Again, this is missing from the Sector deal.

Other less obvious changes include the bedding down and the influence of NHSE, both in leading and setting an example to the wider NHS, but also as the buyer of specialised medicines and cancer drugs. Examples include its role in the introduction of a budget impact test – where negotiation with NHSE could be on the cards if a drug looks like it will cost more than £20 million in any of the first three financial years after launch, even if NICE-approved – as well as the transfer into NHSE of the formerly DH-based Commercial Medicines Unit (CMU).

Easy to say, hard to measure

The most concrete commitment to innovation in the 2014 PPRS is shown by the inclusion in NHSE’s Mandate. There were general commitments in the 2014/15 Mandate, 2015/16 Mandate and, by the 2016/17 Mandate, measurable goals – in theory but with no numbers – were set, including ‘measurable improvement in NHS uptake of affordable and cost-effective new innovations’ by 2020, and by 2016/17 to implement the agreed recommendations of the AAR.

The current Mandate for 2017/18 includes the need for a measurable improvement in uptake, but links this to uptake of innovations prioritorised by the AAP, and focusing on those that are affordable and cost effective. A key deliverable is to ‘work with the Department of Health to agree a clear role for NHS England in implementation of the recommendations of the Accelerated Access Review’. Over time, therefore, commitments have become more vague.

A review of AHSNs is underway, which complements a regular annual report. The latest annual report highlights that AHSNs have worked with the ABPI, as well as other commercial organisations.

The review of AHSNs is not linked to the PPRS, though, but to the five-year cycle of licensing that underpins them. Their licences are due to end in March 2018. NHSE is proposing that NHSE works with AHSNs – including a new AHSN national office – to ‘tease out the most promising methods, avenues and projects to maximise value’. They should be relicensed following the review by April 2018. It is not clear from an NHSE board paper from July 2017 whether, and if so how, industry has been involved in the review and in shaping forward plans.

Can the PPRS really support the growth and innovation agenda?

The 2014 PPRS set out a goal to support the government’s growth and innovation agenda but there is little in there about how this will be measured (although there are some relevant indicators when it comes to access as set out in a companion piece on improving access). In part, that’s understandable since the government’s agenda can change – and during the 2014 PPRS there were both expected and unexpected general elections, plus a referendum on leaving the EU – but it does make it tricky to judge whether the PPRS has delivered.

Many of the actions supporting the growth and innovation agenda sit within other documents and under the remit of other agencies, including the Office for Life Sciences (OLS), the Department for Business, Energy & Industrial Strategy (BEIS), as well as within the NHS, including NHSE and individual NHS trusts and groups like the AHSNs.

The PPRS is just one tool in the government’s toolbox trying to compete on the global stage for life sciences investment. Putting in a link between the PPRS and wider industrial policy makes sense, up to a point. The more that is added into the PPRS, the more complex it becomes and its remit to hold others in the system accountable is diluted. After all, to date, the PPRS has been signed up to by the DH and the ABPI and not other parties. The DH and some of the key agencies, including NHSE, have regular accountability meetings. Those discussions touch on industry issues. For example Simon Stevens raised the issue of the DH needing to consider the affordability of implementing NICE decisions at the current threshold back in November 2015 – but the minutes haven’t reported on any discussions on the PPRS or innovation explicitly. That doesn’t mean that they aren’t discussed, but it is hard to show if they have.

A successor to the 2014 PPRS would do well to consider how best to ensure that there are mechanisms to hold the wider system to account on growth and innovation. That may mean a commitment to a review of the AHSNs’ work with industry, for example – if industrial policy stays within the scheme.

About the author:

Leela Barham is an independent health economist and policy expert who has worked with all stakeholders across the health care system, both in the UK and internationally. Leela works on a variety of issues: from the health and wellbeing of NHS staff to pricing and reimbursement of medicines and policies such as the Cancer Drugs Fund and Patient Access Schemes. Find out more here and contact Leela on

Read the previous articles in this 5-part series examining the PPRS:

Part 1: Unstable and unpredictable? The reality of the PPRS

Part 2: What is ‘affordable’? The reality of the PPRS

Part 3: Improved access? The reality of the PPRS 

Part 4: Bureaucracy and duplication: the reality of the PPRS