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NHS, Drugmakers Agree to New Five-Year Pricing Scheme

NEW YORK – The UK government, the National Health Service England, and the Association of the British Pharmaceutical Industry have inked a new five-year agreement aimed at improving patients' access to innovative medicines while also saving the healthcare system money.

Under the Voluntary Scheme for Pricing, Access, and Growth (VPAG), announced on Monday, the NHS will increase annual spending on branded medicines from 2 percent in 2024 to 4 percent by 2027. The deal is also structured to save the NHS £14 billion ($17.6 billion) over five years in drug costs, for example, through mechanisms aimed at reducing spending on older medicines that haven't yet seen price reductions. Pharmaceutical companies will also invest £400 million over five years to improve clinical trials, health technology assessment, and manufacturing capabilities.

The scheme is expected to particularly improve patients' access to precision treatments. "To ensure NHS patients across the country can continue to rapidly access innovative medicines, the new agreement highlights how the government, the NHS, and the pharmaceutical industry will commit to piloting new approaches for paying for ground-breaking advanced therapy medicinal products, such as personalized cancer therapies and life-saving 'one shot' gene therapies," the government said in a statement announcing the VPAG.

As the NHS begins to implement the drug pricing framework in 2024, the government acknowledged that there will be instances where innovative payment models are needed to facilitate access to advanced therapies. The agency aims to initiate two pilots to explore new payment models for such medicines.

The VPAG replaces the previous Voluntary Scheme for Branded Medicines Pricing and Access, in effect from Jan. 1, 2019, to Dec. 31, 2023. That agreement allowed NHS's drug spending bill to increase by 2 percent per year and required drugmakers to pay a levy to the UK's Department of Health and Social Care to reimburse for any additional costs above capped expenditures.

"This landmark agreement will not only save the NHS money, but help patients get access to the very best medicines and treatments for years to come," UK's Chancellor of the Exchequer Jeremy Hunt said in a statement. "With significant new industry investment in research, clinical trials and manufacturing, this deal will bolster Britain's position as the largest life sciences hub in Europe and support a sector so critical to our country’s health, wealth and resilience."