PharmExec Blog

UK Value-Based Pricing: Will Scotland Take a Different Approach?

Value Based Pricing: Will Scotland take a different approach?
By Leela Barham
Value Based Pricing (VBP) continues to confuse many in the UK and further afield.  The Scottish Parliament’s Health and Sport Committee is the latest parliamentary committee to question civil servants about what it’s all about.  On the 14th May 2013 Scottish Members of Parliament got the chance to quiz Katy Peeters from the Department of Health in England, about plans so far. For those who don’t want to watch the 82 minute session (although I recommend that you do, see www.youtube.com/watch?v=QYSoOxkmKvo), here are the key take-aways.
The Loch Ness Monster is more likely to be found than VBP
The Scottish MPs were keen to understand exactly what VBP will be, and how it will affect Scotland’s agencies, such as the Scottish Medicines Consoritum (SMC), and Scottish patients.  That they were frustrated, and indeed others within Scotland too, about a lack of detail on the policy that is due to be implemented in around 6 months, came clearly through.  One view was that the Loch Ness Monster would be more likely to be found before VBP was found.
UK determines the ‘P’, but devolved nations determine the ‘VB’
Much of discussion in the session was trying to disentangle just which bits of VBP are reserved, and hence up to Westminster to decide for the whole of the UK, and which bits are devolved, and allow for Scotland to take their own approach.  The conclusion seemed to be that pricing was reserved but pretty much everything else isn’t.  Keeping pricing at the UK level was justified by Katy Peeters because it “allows us [the UK] to maximise our bargaining power and provides a useful degree of consistency and stability to the pharmaceutical industry”.
Given this, the Scottish Government, and agencies like the SMC, can’t therefore “say, you [industry] do not have freedom of pricing” according to Peeters.
VBP will take a wider view of value
Although the Scottish MPs were unclear exactly how it would be done, Peeters highlighted that there would be a wider assessment of value.  That she said, was “ at the core of value-based pricing…. the idea that we take account of all components of a medicine’s benefits, which will cover privately and publicly funded social care and informal care”.
VBP might mean paying more
Given the wider assessment that is planned under VBP, Peeters said that it was possible that the UK may pay more for medicines. She said that, “With value-based pricing, we are considering paying more for the medicines that bring the health gains that society values”.
But overall, not much will actually change, including retaining freedom of price at launch
Despite all the interest in the impact of VBP, Peeters stressed repeatedly that actually not much will change in the agencies and processes for VBP or even in the Pharmaceutical Price Regulation System (PPRS), which is subject to ongoing confidential negotiations between the Department of Health in England and the Association of the British Pharmaceutical Industry (ABPI).  She said, “the [VBP] system will not look that different from the current system”.  Mostly it seems VBP will mean just a wider assessment of value from NICE for England.  And she said, “The PPRS will evolve from, but would be similar to, the current PPRS.”  Perhaps of greater interest to those in pharma was the re-iteration that free pricing at launch will remain; Peeters said, “a company will be able to propose a price, just as it does now”.
Scotland can take it’s own approach to ‘VB’
Repeatedly Peeters highlighted that it would be for Scotland to decide whether, and how, to import changes aside from pricing under VBP in England up to Scotland.  She said that whether SMC could adopt a wider assessment, “will be a question for the Scottish Parliament and the Scottish Government.”  Further that, “given a particular price, the debate about whether that drug or medicine is a good use of Scottish money would be a question for the Scottish authorities, including the SMC”.  How this freedom for Scotland, and the SMC, will be translated is unclear.
But confusion still reigns
It’s worth ending on a statement from Bob Doris who summed it up by saying; “Thank you for increasing my confusion”.
Leela Barham is an independent health economist
You can contact her on: leels@btinternet.com

By Leela Barham.

Value-based pricing (VBP) continues to confuse many in the UK and further afield. The Scottish Parliament’s Health and Sport Committee is the latest parliamentary committee to question civil servants about what it’s all about.  On the 14th May 2013 Scottish Members of Parliament got the chance to quiz Katy Peeters from the Department of Health in England, about plans so far. For those who don’t want to watch the 82 minute session (although I recommend that you do, click here), here are the key take-aways.

The Loch Ness Monster is more likely to be found than VBP
The Scottish MPs were keen to understand exactly what VBP will be, and how it will affect Scotland’s agencies, such as the Scottish Medicines Consoritum (SMC), and Scottish patients.  That they were frustrated, and indeed others within Scotland too, about a lack of detail on the policy that is due to be implemented in around six months, came clearly through.  One view was that the Loch Ness Monster would be more likely to be found before VBP was found.

UK determines the ‘P’, but devolved nations determine the ‘VB’
Much of discussion in the session was trying to disentangle just which bits of VBP are reserved, and hence up to Westminster to decide for the whole of the UK, and which bits are devolved, and allow for Scotland to take their own approach.  The conclusion seemed to be that pricing was reserved but pretty much everything else isn’t.  Keeping pricing at the UK level was justified by Katy Peeters because it “allows us [the UK] to maximise our bargaining power and provides a useful degree of consistency and stability to the pharmaceutical industry”.

Given this, the Scottish Government, and agencies like the SMC, can’t therefore “say, you [industry] do not have freedom of pricing” according to Peeters.

VBP will take a wider view of value
Although the Scottish MPs were unclear exactly how it would be done, Peeters highlighted that there would be a wider assessment of value.  That she said, was “ at the core of value-based pricing…. the idea that we take account of all components of a medicine’s benefits, which will cover privately and publicly funded social care and informal care”.

VBP might mean paying more
Given the wider assessment that is planned under VBP, Peeters said that it was possible that the UK may pay more for medicines. She said that, “With value-based pricing, we are considering paying more for the medicines that bring the health gains that society values”.

But overall, not much will actually change, including retaining freedom of price at launch
Despite all the interest in the impact of VBP, Peeters stressed repeatedly that actually not much will change in the agencies and processes for VBP or even in the Pharmaceutical Price Regulation System (PPRS), which is subject to ongoing confidential negotiations between the Department of Health in England and the Association of the British Pharmaceutical Industry (ABPI).  She said, “the [VBP] system will not look that different from the current system”.  Mostly it seems VBP will mean just a wider assessment of value from NICE for England.  And she added, “The PPRS will evolve from, but would be similar to, the current PPRS.”  Perhaps of greater interest to those in pharma was the re-iteration that free pricing at launch will remain; Peeters said, “a company will be able to propose a price, just as it does now”.

Scotland can take it’s own approach to ‘VB’
Repeatedly Peeters highlighted that it would be for Scotland to decide whether, and how, to import changes aside from pricing under VBP in England up to Scotland.  She said that whether SMC could adopt a wider assessment, “will be a question for the Scottish Parliament and the Scottish Government.”  Further that, “given a particular price, the debate about whether that drug or medicine is a good use of Scottish money would be a question for the Scottish authorities, including the SMC”.  How this freedom for Scotland, and the SMC, will be translated is unclear.

But confusion still reigns
It’s worth ending on a statement from Bob Doris who summed it up by saying “Thank you for increasing my confusion”.

Leela Barham is an independent health economist. You can contact her at leels@btinternet.com

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