It is an agreement between the Association of the British Pharmaceutical Industry (ABPI) and the Department of Health (DoH) that determines how much companies can charge for supplying medicines to the NHS – and how much profit those companies can make from the sales.
This includes everything branded, licensed and prescribed for patients, but not medicines sold OTC.
But has this not been around for years?
Just over four years, to be precise – since 1 October 1999. But it was only ever a five-year agreement, which means negotiations are now starting on the replacement, which will run from October this year.
What is the Department of Health saying about it at the moment?
In the Government’s recently launched discussion paper on the subject, Health Minister Lord Warner said: ‘We want to consult widely before the start of these negotiations to fully take account of the views of the NHS and other stakeholders.’
So what are the pharma companies doing about it?
As you would expect, they are limbering up for the frantic round of negotiations between their representative body (the ABPI) and the Department of Health.
How much money are scheme members currently allowed to make out of NHS sales?
Between 17 per cent and 21 per cent
of their return on capital per annum. At present, ‘margins of tolerance’ determine the circumstances in which scheme members can keep more of the profit than that.
Bones of contention?
The financial tightrope act between the pharma industry’s needs and those of the purchaser. Any move seen to push that too far in either direction will imperil a new agreement. After all, the Government needs pharma firms to have the money to develop and supply new treatments.