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Those hoping for a quiet August in the world of healthcare market access were sorely disappointed this summer, as the Department of Health and Social Care launched two significant consultations within days of each other.

The first consultation, which outlines plans to update the statutory scheme for branded medicines, suggests a hike in the annual payment percentages to over 21% by 2021. As well as this increase, which is large compared to the current statutory scheme payment percentage of 7.8%, the consultation sees the Department make something of a landgrab, as they recommend that all biological medicines, including biosimilars, are included in the scheme.

While the consultation document makes some effort to address the obvious concerns that these proposed changes might raise for industry, the case made for the changes fails to address the likelihood that raising the percentage payment almost three-fold over as many years would harm the Life Sciences sector in the UK.

For instance, the Department suggests that as many companies’ R&D costs are calculated at global level, the increased payments back to the UK Government would not have a large impact on the company’s return on investment as a whole. The Department acknowledge that the UK is a small market, and fail to address the idea that a company may decide to withdraw a product from the UK, or simply not to launch here. In identifying the UK as a relatively small market for global pharma they miss the point that some companies may take the view that launching here requires more resource than can be justified.

The second consultation brings to the table (again) the suggestion that NICE will charge companies for any Technology Assessments carried out from April 2019. This would include STA, HST, FTA, RR and MTA. With the proposed costs ranging from a stonking £251,000 for a complex MTA, to £66,000 for a rapid review or fast track appraisal for a small company, the document, along with the Statutory Scheme Consultation, leaves the distinct impression that the Department intends to squeeze pharma financially. Even the provision that small companies will be required to pay a reduced fee, as was added in response to complaints during the 2016 consultation that the proposals disadvantaged small companies, hardly seems like a significant concession – an STA would set a small company back £94,500.

The fact these two significant policy reforms were announced in the context of the ongoing PPRS negotiations should not be overlooked. The Department may be making a thinly veiled attempt to ensure industry brings their very best offer to the table, despite their claim in the Statutory Scheme Consultation that ‘the changes proposed… do not prejudge the outcome’ of the PPRS talks. Likewise, the NICE consultation suggests that industry must begin to pay more to be able to play in the UK market, and this could foreshadow the deal that is expected to emerge by the end of the year.

However, as the UK market looks set to become an even tougher one to operate in, the Department must consider that the useful bargaining chip of a single point of entry to market, in the form of the NHS, may lose its appeal in a challenging, post-Brexit environment.

For further information about these consultations and how you should consider responding please contact Claudia Forsyth, at Decideum

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