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VPAS Update – Judicial Review

Mark Samuels, Chief Executive of the British Generic Manufacturers Association (BGMA), said:

“Generic and biosimilar medicines are four out of five drugs used by the NHS: 2.2 million medicines a day. However, the Government has decided not to involve the trade body representing these medicine suppliers in its negotiations on the voluntary scheme for branded medicine pricing (VPAS). We are deeply concerned by this decision. It has left us no choice but to take legal action.

“While not all generic drugs fall within VPAS, four out of ten products in the current scheme are branded generics or biosimilars. As the representative trade body for both generic and biosimilar UK manufacturers, we must play a full part in the VPAS negotiations for the next period of the scheme from 2024 to 2028.

“The industry subsists on thin margins because these medicines do not benefit from patent-protected prices. Off-patent medicine manufacturers operate in a highly competitive market – it keeps prices low, and the NHS’s drug bill would be unaffordable without them. Generic and biosimilar medicines are often over 80% cheaper than the originator’s product. Despite delivering the lowest generic medicine prices in Europe – our manufacturers currently have to pay an additional 26.5% VPAS tax on their revenues as a result of VPAS. We supply nearly half the products in the pricing scheme yet are hit twice. This double-whammy makes some products lossmaking; hence we must play a full part in the VPAS negotiations to find ways to avoid damaging one of the UK’s most critical industries.

“The VPAS tax has risen five-fold in under two years, an unprecedented tax increase. Yet our sector currently has no input into the negotiations on future schemes or rates; this is untenable as any decisions made on VPAS could significantly define the future of our sector in the UK and its ability to supply the NHS.

“The off-patent sector provides the UK with the lowest medicine prices in Europe, but that is in serious jeopardy as a result of VPAS, which, if not changed, will mean the NHS paying substantially more and the supply chain becoming significantly less resilient. We first raised our full participation in the negotiations with the Government last November.

“We were initially offered observer status in relation to the negotiations, but this is not sufficient given the existential impact the rate is, and will have, on branded generic and biosimilar manufacturers. We also do not believe the Association of the British Pharmaceutical Industry (ABPI) - who are the only party with whom the Government currently negotiates - can adequately represent or balance the interests of the off-patent sector in these negotiations.

“Therefore, in the Government’s continued refusal to allow us to participate fully, we have begun a judicial review process to challenge the decision to exclude us as a full partner in the forthcoming VPAS negotiations.”