Review raises concerns about approach taken by the DHSC regarding changes to Statutory Scheme
Proposed changes to the ‘Statutory Scheme’ for branded medicines may deter investment in developing, researching and launching new medicines in the UK – potentially limiting patients’ access to treatment and clinical trials – according to new analysis.
The review by NERA Economic Consulting, which was commissioned by the Association of the British Pharmaceutical Industry (ABPI), raises serious concerns about the analysis, assumptions and approach taken by the Department of Health and Social Care (DHSC) in its consultation on proposed changes to the Statutory Scheme.
Both the Statutory Scheme and the Voluntary Scheme require companies to pay back a percentage of their NHS-branded medicines sales each year to DHSC. Indeed, these payments are on top of NICE’s assessment of value for money, separately negotiated discounts with the NHS and various other business taxes.
A NERA team led by Senior Managing Director George Anstey found the DHSC Statutory Scheme proposals to be solely concentrated on just one of its three stated objectives – constraining the costs of branded medicines.
Other significant objectives, which don’t appear to receive the same focus, include ensuring that medicines are available and on reasonable terms that account for the costs of research and development. Another aspect is the need to support the UK life sciences sector and the broader economy.
The NERA team determined that the proposals are likely to deter investment in developing and launching new medicines in the UK, and could result in low-margin medicines being withdrawn from the UK market, limiting NHS patients’ access to medicines in the process.
The report was also critical of how the DHSC valued and offset the potential impact of its proposals on investment in UK research and development, relying on simplistic assumptions about how R&D investment would be impacted by the proposals.
Richard Torbett, Chief Executive, ABPI, explained: “NERA’s analysis raises serious questions about the quality, underlying assumptions, and objectives of the Statutory Scheme proposals, and these must be fully addressed before any final decisions are taken.
“While we recognise the very acute financial constraints the government faces, left unchanged these proposals will do serious harm to the UK’s reputation as a global centre for life sciences.”
George Anstey, Senior Managing Director, NERA Economic Consulting, reflected: “The ability to make informed policy choices relies on an accurate picture of the cost and benefits of any decision. The findings set out in our report suggest that this consultation falls well short of this goal.”
He added: “These proposals will likely lead to clawback payments worth billions of pounds from industry to the DHSC without a true assessment of the wider costs and benefits to the UK economy. On this basis, DHSC should be held to a higher standard and be subject to greater independent scrutiny than is currently the case.”
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