VPAS repayments continue to cause concern


The UK pharmaceutical industry is bracing itself for a punishing 2023. Under the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) repayment mechanism, companies will be required to pay back roughly 30% of sales of most branded medicines to the Department of Health and Social Care (DHSC) [1].

In previous articles we have discussed at length how we have got here with VPAS and reported on growing industry dissatisfaction with a voluntary scheme that was once predictable and is now producing punitive results.

During the period of predictability, the yearly repayment percentage fluctuated between 5% and 10% (in line with similar mechanisms operating in other countries) and relatively little was written or spoken about VPAS in mainstream media. However, in the last week alone the Financial Times has published two articles focussing on industry’s concern.

In the first of these articles (behind a paywall), the Financial Times quotes the chief executive of Bristol Myers Squibb, Giovanni Caforio, who told the newspaper that “from a commercial perspective, the environment [in the UK] is not actually supporting continued investment in the UK. And that is particularly disappointing at a time in which actually the government in the UK has clearly articulated life sciences as an important priority for the country.”

In the past, the government pushed back against the idea that reduced company revenues as a result of increased repayment rates will lead to a reduction in R&D investment in the UK. In consultation responses published in June, the government wrote that “siting of research and development facilities should not be affected by demand or procurement for final products in the local market.”

The government has expressed openness to ideas about how a new scheme should operate once the current agreement runs out at the end of 2023. However, given the current economic climate and with austerity firmly back on the agenda, it will be difficult for the Association of the British Pharmaceutical Industry (ABPI) to negotiate a new voluntary agreement that results in the pharmaceutical industry paying less back to the DHSC.

[1] This is subject to some fairly narrow exemptions such as an exemption for the first three years after launch of a new active substance.