That is the news out of the UK today. A press release from the United Kingdom government states:
A 25% increase in medicine pricing corresponds to 2 changes to the way NICE evaluates medicines; a change to the cost effectiveness thresholds and the introduction of a new value set for judging health states.
NICE currently assesses value for money for the NHS by applying a standard cost-effectiveness range of £20,000 to £30,000 per quality adjusted life year gained over and above current treatments. This means that for a medicine to be considered cost effective, it should typically generate the equivalent of 1 additional year of perfect health taking account of additional life expectancy and health-related quality of life improvements for no more than £20,000-£30,000 over the cost of current care. It has now been agreed that NICE will apply new thresholds of £25,000 to £35,000/QALY.
As part of today’s announcement, the government will support NICE’s use of a new value set for valuing health-related quality of life. The value set comes from asking thousands of people from the public to judge how good or bad different health states would be. These are then used to calculate numerical values, which help healthcare decision-makers compare different treatments and understand their impact on health-related quality of life. NICE will introduce the new value set for use alongside EQ-5D-5L following consultation. This change may additionally improve the cost-effectiveness of medicines on average
Perhaps more importantly, however, is that the VPAG mandatory rebate will be decreased. The current rebate scheme–Voluntary Scheme for Branded Medicines Pricing and Access (VPAG)–forces pharmaceutical manufacturers to pay rebates if total UK spending on branded products exceeds expectations. The Guardian reports:
At the heart of the new UK-US deal is an agreement to lower a so-called “rebate” under the medicines payment arrangements between drug companies and the NHS.
Under the current scheme, drug companies are required to pay the NHS between 23.5% and 35.6% of revenue from sales of branded medicines, if the amount the public health service uses is higher than an agreed rate.
This will be reduced to 15% under a new rebate in the existing voluntary scheme for branded medicines pricing and access.
ABPI writes that this news reverses decades of decreased spending on pharmaceuticals.
The deal commits the UK to addressing the country’s past decade of underinvestment in medicines, which has seen the proportion of health spending on medicines fall from around 14% to 9%. Over the next 10 years, the country will increase investment in new medicines from around 0.3% of GDP to 0.6% of GDP, with key target milestones along the way.
Why is the UK doing this? The UK currently exports £6.6bn a year worth of pharmaceuticals to the US and President Trump threatened to put 100% tariffs on all these pharmaceutical exports. Under the new agreement, UK pharmaceuticals will be exempt from these tariffs for the next 3 years.
