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BGMA welcomes recognition of competition in statutory scheme

• Association supports the concept of Life Cycle Adjustment but calls for tailored approach to reflect market dynamics and avoid unintended consequences

The British Generic Manufacturers Association (BGMA), the representative trade body for off-patent prescription medicines, has published its response to the Government’s scheme to control the cost of branded health service medicines and has welcomed the recognition of the impact of competition in the proposals.

The BGMA represents 8 out of 10 of the largest medicines suppliers by volume to the NHS and nearly half of all products impacted by either the voluntary scheme, or the accompanying statutory scheme, are off-patent medicines in the form of branded generics or biosimilars.

Off-patent products are already subject to competition which can reduce prices paid by the NHS typically by up to 90% of the originator price. However, branded generics and biosimilars also face the additional cost burden of the voluntary or statutory scheme rebates which are a substantial percentage of revenues and for many manufacturers make products simply unviable.

The BGMA’s chief executive Mark Samuels, said: “We are pleased that the Statutory Scheme consultation recognises that branded generic and biosimilar medicines are subject to different market dynamics and competitive pressures, and as such, one size fits all approach across all branded products is not suitable for the next five years.

“It is critically important that a properly tailored approach is taken to this sector, allowing sustainability and growth. Branded generics and biosimilars account for nearly 40% by volume of all branded medicines sold for just 17% of the cost. Therefore, we strongly support a different way of seeking a contribution from the branded pharmaceutical industry. We support the concept of the Life Cycle Adjustment (LCA) proposal in the Statutory Scheme consultation.

“However, as it is a new concept, we strongly recommend a number of amendments to minimise unintended consequences and align it to how the market operates in practice.”

The terms of the next voluntary scheme period of 2024 to 2028 is currently being negotiated between the Department of Health and Social Care (DHSC), NHS England and The Association of the British Pharmaceutical Industry (ABPI). If an agreement isn’t reached, the statutory scheme will automatically be implemented from the start of next year.

Mark Samuels added: “While we welcome many aspects of the statutory scheme, there needs to be a more flexible definition of competition than is currently articulated otherwise there is a danger of limiting innovation and preventing better treatments being available to patients. There also needs to be an acceptance and allowance for where older products branded by choice, are operating in competitive markets and delivering savings to the NHS. Limiting a lower rate to just where there is a regulatory requirement for a brand, could well lead to the NHS missing out on a large amount of off-patent savings and lead to a greater increase in shortages.

“Other areas for greater focus include the time it will take in primary care for new entrant manufacturers to increase their market share to qualify for the discount rate as one-year will not be enough. Also, consideration is needed on how the proposals will work in secondary care tendering as suppliers will need to know the rebate level before bidding.”

As part of its consultation response, the BGMA surveyed its members. The findings showed that if the current LCA proposals were not adjusted 55% of members who supply products branded by choice would reduce their current levels of supply while more than a third (36%) would stop new launches altogether in the next two years.

From a biosimilar perspective, 86% of those surveyed said they would shelve new launches while 82% of regulatory branded generic suppliers would follow suit.

Despite this, most respondents (67%) believe that the LCA proposals are better than the flat variable rate alternative listed in the consultation, with 16.5% against and 16.5% unsure.

ENDS

For further information about the BGMA please contact Jeremy Durrant on 07792918648 or email Jeremy.durrant@britishgenerics.co.uk

About the British Generic Manufacturers Association (BGMA)

The BGMA is made up of members of the generic manufacturing supply industry, who between them account for approximately 85% of the total UK generic market by volume. A key feature of the strong generics industry in the UK is that it introduces competition to the supply of prescription medicines making them more affordable to the NHS and enhancing their availability to patients.

According to NHS figures (NHS Digital), more than a billion items are prescribed generically every year. The competition provided by generic medicines saves the NHS around £15billion annually.