ABPI welcomes first payments to UK’s Pharmaceutical Price Regulation Scheme

The Association of the British Pharmaceutical Industry (ABPI) and the UK’s Department of Health have today announced the first payment of £74 million ($126 million) by industry to underwrite the growth in the branded medicines bill under the 2014 Pharmaceutical Price Regulation Scheme (PPRS).

The payment accounts for the first three months of 2014. The first year payments have been agreed at 3.74% of companies’ net sales, which is based on a joint forecast of growth in the branded medicines bill. In subsequent years the payments will be adjusted based on actual growth rates.

Under the scheme the amount the National Health Service spends on the branded medicines controlled by the scheme will remain flat for two years, followed by increases of less than 2% in the following three years. The industry will make payments to the Department of Health if NHS spending on branded medicines exceeds the allowed growth rate, while payments are based on the difference between the allowed percentage growth and the actual percentage growth in how much the NHS spends on branded medicines. PPRS payments are due one month after the end of each calendar quarter and are calculated based on suppliers’ returns on net sales for that quarter.