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Opinion: VPAG can only lead to further medicines shortages

Targeting older medicines for punitive rebates will disproportionally impact smaller to medium sized pharmaceutical companies and undermine the Government’s ambition for the UK to be a life sciences superpower, says Jeremy Thorpe, managing director of Tillotts Pharma UK.

The Government’s decision not to proceed with a lifecycle adjustment mechanism for older medicines is to be welcomed – but significant challenges remain for patients in 2024, particularly patients on older branded medicines made by companies in the VPAG scheme.

The increasingly punitive Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG, as it is known) has already contributed directly to the shortages of over 100 medicine products across a wide range of conditions, including for Crohn’s disease.

The proposal for a lifecycle adjustment mechanism for older medicines, which would have imposed levies of up to 40 per cent for some medicines that had been on the market for more than 12 years, was rightly dropped from the statutory scheme in December. Thanks to a concerted and united response from industry, the Government will not apply the mechanism on branded drugs sold to the NHS, but will instead consult on an alternative arrangement. 

Far-reaching implications

However, the 2024 VPAG heads of agreement revealed that the principle of highly punitive rebates for older medicines lives on. The voluntary scheme will now include rebates of up to 25 per cent for older medicines, which will have far-reaching implications.

Like many life sciences companies, Tillotts manufactures and supplies tried and tested medicines for small numbers of patients underserved by larger companies and generic houses. The planned additional rebates for older medicines will see smaller to medium sized pharmaceutical companies (SMEs) disproportionately penalised for filling this gap.

Punitive rebates such as those proposed will force companies into taking mitigatory actions so that the rebates can be accommodated. This could include scaling back R&D investment, debranding, using parallel trade to supply the UK or even moving supply to other higher-priority countries. All of which will only serve to exacerbate the existing supply issues. 

The higher rebates will result in severe, unintended consequences for patients, and especially those that suffer with less common conditions. Where these rebates worsen shortages, they will force patients into hospital at a huge cost to the NHS.

An example of this is ulcerative colitis, where there is a five-fold increase in the risk of patients suffering a flare-up if they stop taking their medication. Flare-ups are generally treated in hospital and therefore cost the NHS up to 10 times the annual cost of maintenance of remission, with patients likely to leave hospital on a much more expensive biological medicine. 

Patient impact

The principle of increasing rebates levied on older medicines is valid to a degree in its aim to drive innovation but fails to take into account the impact on patients with less common conditions, who rely on medicines based on older molecules for effective treatment. Furthermore, innovation with regards to established molecules is disincentivised by the proposed changes. 

At Tillotts we have had success in repurposing and modifying medicines while keeping the active substance the same. Research and development and its clear benefit to both patients and the potential savings to the NHS are overlooked by the Government’s rebate hikes. 

SMEs are an integral part of the UK’s life sciences landscape. They account for approximately 50 per cent of UK branded medicines sales. In the last year alone, emerging biopharma companies were responsible for 65 per cent of molecules in the global research and development pipeline.

Higher rebates for older medicines will fail with regards to cost savings and innovation, as well as having a serious impact on NHS patients and the wider life sciences landscape. The Government must think again. 

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