PSNC Responds to DH Value Based Pricing Consultation

Changes to pricing and reimbursement arrangements for Branded Medicines
Changes to national pricing and reimbursement arrangements for branded medicines could impair competition and compromise supply to patients if they are rushed or not effectively consulted upon. In  response to the Department of Health’s consultation on the introduction of value based pricing for branded medicines, PSNC has argued that the mistakes of the past could be repeated and exacerbated if new arrangements are not carefully considered.
The PSNC’s response stresses that supply chain risks should be addressed if planned changes are to avoid compromising the safe supply of medicines to patients. Identifying possible list price reductions as a particular area of concern, PSNC has backed alternative arrangements, including supporting the concept of manufacturers paying ‘value-based rebates’ to the NHS.
Under the pharmacy funding arrangements, pharmacies in England are guaranteed £500m of purchase profit income per annum. This is core NHS funding for the pharmacy contract, therefore changes in the availability of branded purchase margin have a direct impact on NHS costs. PSNC estimates that changes in the distribution of branded medicines have cost the NHS £400m in lost savings since 2007 through reduced competition in the wholesaling market and increased pharmacy procurement costs. Such waste would be avoided in future by ensuring that the branded pricing arrangements take into account supply chain costs, and incentivise the efficient supply of medicines to pharmacies.
PSNC is also calling for the pricing arrangements for branded medicines to be aligned wherever possible with the purchase profit elements of the pharmacy contractual framework. A key area of misalignment at present is branded generic prescribing – a practice that stifles competition in the generics market and keeps NHS costs high.
PSNC has also stressed that deliberations over pricing should not be allowed to obscure the colossal hidden costs of patient non-adherence to medicines; a phenomenon that means up to half of all medicines are not used effectively. Welcoming the recent commissioning of a National New Medicines Service that will support patients right from the start of a course of medicinal therapy, PSNC is calling for the continued expansion of community pharmacy’s work in medicines optimisation.
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