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‘Spiralling’ drugs tax will force ICBs to find extra £37 million annually


‘Spiralling’ drugs tax will force ICBs to find extra £37 million annually

By Neil Trainis

The British Generic Manufacturers Association has today warned the government that its “spiralling” tax on medicines will force integrated care boards in England to find another £37 million each year on average over the next five years and increase the risk of drug shortages.

In a report examining the potential impact of the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) on ICB budgets, the BGMA said the local structures face “substantial rises” in the prices they pay for branded generics and biosimilars because of reduced competition.

The BGMA has repeatedly warned the tax on drugs will deter generic manufacturers from launching products in the UK. Talks between the Association of the British Pharmaceutical Industry, NHS England and the Department of Health and Social Care on the next five-year VPAS deal covering 2024 to 2028 have already started.  

The BGMA, who said its report was “prepared” by consultancy Conclusio and was based on its talks with local NHS leaders, warned that although the size of ICBs differs across the country, the extra £37 million they will each need to find represents about 10 to 20 per cent of their entire pharmaceutical spend.

The BGMA said branded generics and biosimilars manufacturers "face a double whammy of having their prices constrained by competition as well as having to pay the increasing VPAS levy on their revenues."  BGMA chief executive Mark Samuels said it was “an unsustainable position” for manufacturers because they “cannot afford to keep absorbing an increasing rate on top of having their prices constrained by competition.”

“The VPAS rate has spiralled, rocketing to 26.5 per cent with every chance it could go higher in the future,” he said. “Manufacturers are already having to make very difficult decisions as to whether they can continue to maintain supply of products.”

Warning that future launches in the UK “are in jeopardy,” Samuels added: “More than 85 biological medicines will lose their exclusivity in the next five years including blockbuster products such as cancer medicine Keytruda and wet macular product Eylea.

“These represent a great savings opportunity to the NHS, but they won’t fulfil their savings potential if competition is reduced because fewer companies enter the market.

“The reduced savings will undoubtedly be felt at the frontline of delivery and is likely to add even further strain on already thinly stretched local NHS budgets.”

The BGMA also warned the rising tax leading to reduced competition and shortages of medicines could force pharmacists to spend “up to a third of their working week mitigating shortages.” Patients struggling to access “preventative treatments,” it warned, could end up seeking help at hospitals, thus heaping pressure on other parts of the NHS and “resulting in potentially worse patient outcomes.”


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