The 2019 voluntary scheme for branded medicines pricing and access: payment percentage for 2022
Published 20 January 2022
Applies to England
© Crown copyright 2022
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/voluntary-scheme-for-branded-medicines-payment-percentage-for-2022/the-2019-voluntary-scheme-for-branded-medicines-pricing-and-access-payment-percentage-for-2022
Overview
The Department of Health and Social Care (DHSC) and the Association of the British Pharmaceutical Industry have agreed to amend paragraph 77 in annex 5 of the voluntary scheme for branded medicines pricing and access to set the 2022 payment percentage (P%4) at 15%.
In all other respects, the voluntary scheme and it’s annexes shall remain unchanged and in full force and effect, such that the payment percentage for 2023 will consequently increase to capture the income forgone as a result of this change in the usual way.
The change is made on an exceptional basis in recognition that rapid growth in total measured sales in 2021, resulting in part from demand related to the coronavirus (COVID-19) pandemic, would have otherwise led to a substantial increase in the payment percentage to 19.1%.
While this is evidence of the scheme adjusting for high growth as intended, the parties recognise the impact of this on scheme members as well as the current high levels of uncertainty about underlying sales growth, and accordingly agreed to apply a payment percentage of 15% for 2022. This has the effect of phasing in the impact of increased payments over the remaining 2 years of the scheme.
A further change has been agreed to amend annex 4 such that when proxy growth data is used to set the following year’s payment percentage, growth will be calculated on the basis of the previous 3 quarters rather than the previous 4 quarters. It is on this basis that the 2022 payment percentage was calculated as 19.1%. However, this is overridden by the agreement to instead set the 2022 payment percentage at 15%.
Measured sales growth rates
The calculations below demonstrate the process that would have been followed to calculate the 2022 payment percentage had a fixed rate of 15% not been agreed.
The payment percentage is calculated on the basis of growth in measured sales between 2018 and 2019, between 2019 and 2020, and between 2020 and 2021. Measured sales growth rates are calculated as described below.
Growth in measured sales for the 2019 voluntary scheme (that is a comparison of their respective measured sales) is calculated from sales in the 2019 voluntary scheme, the statutory scheme and parallel imports.
Growth in measured sales between 2018 to 2019 and between 2019 to 2020 is based on full-year data where available.
Growth in measured sales between 2020 to 2021 is calculated on the basis of partial-year data, comparing the period January to September 2020 (Q1 to Q3 2020) with the period January to September 2021 (Q1 to Q3 2021).
Furthermore, in accordance with annex 4, paragraph 34 of the voluntary scheme, companies whose sales exceed (or fall below) £5 million between years, and so are included or excluded from measured sales of subsequent years, are excluded from the growth calculations.
First, the growth rates are calculated across each component of measured sales for 2019, 2020 and 2021 as shown in tables 1, 2 and 3.
Table 1: scheme-level measured sales included in the 2019 growth rate calculation
| 2019 voluntary scheme | Statutory scheme | Parallel imports | |
|---|---|---|---|
| 2018 | £8,847 million | £1,654 million | £771 million |
| 2019 | £9,101 million | £1,671 million | £697 million |
| Growth rate | 2.87% (LOVSGR%1c) |
1.04% (LOSSGR%1c) |
–9.58% (LOPIGR%1c) |
Table 2: scheme-level measured sales included in the 2020 growth rate calculation
| 2019 voluntary scheme | Statutory scheme | Parallel imports | |
|---|---|---|---|
| 2019 | £9,101 million | £1,668 million | £697 million |
| 2020 | £10,620 million | £379 million | £766 million |
| Growth rate | 16.70% (LOVSGR%2c) |
–77.29% (LOSSGR%2c) |
9.83% (LOPIGR%2c) |
Table 3: scheme-level measured sales included in the 2021 growth rate calculation
| 2019 voluntary scheme | Statutory scheme | Parallel imports | |
|---|---|---|---|
| Q1 to Q3 2020 | £7,766 million | £277 million | £566 million |
| Q1 to Q3 2021 | £8,557 million | £292 million | £567 million |
| Growth rate | 10.19% (LOVSGR%3c) |
5.31% (LOSSGR%3c) |
0.20% (LOPIGR%3c) |
These growth rates are then applied to the latest outturn 2018 sales returns at scheme level to produce 2019, 2020 and 2021 sales figures. These are then summed to arrive at the growth rates for total measured sales, which can be seen in table 4.
Table 4: scheme-level and total measured sales and total growth rates
| 2019 voluntary scheme | Statutory scheme | Parallel imports | Total measured sales | Growth in total measured sales | |
|---|---|---|---|---|---|
| Latest outturn 2018 | £8,847 million (LOVS0c) | £1,654 million (LOSS0c) | £771 million (LOPI0c) | £11,272 million (LOT0c) | |
| Latest outturn 2019 | £9,101 million (LOVS1c) +2.87% | £1,671 million (LOSS1c) +1.04% | £697 million (LOPI1c) –9.58% |
£11,470 million (LOT1c) | 1.75% |
| Latest outturn 2020 | £10,620 million (LOVS2c) +16.70% | £380 million (LOSS2c) –77.29% |
£766 million (LOPI2c) +9.83% | £11,766 million (LOT2c) | 2.58% |
| Provisional 2021 | £11,702 million (LOVS3c) +10.19% | £400 million (LOSS3c) +5.31% | £767 million (LOPI3c) +0.20% | £12,869 million (LOT3c) | 9.38% |
Table 4 shows that the total measured sales growth rate between provisional 2021 sales and latest outturn 2020 sales is 9.38%. If you follow the usual process, these growth figures would result in a payment percentage of 19.1%.
Adjusted forecasts and payment profile
Table 5 sets out, for each year of the scheme to 2023, the adjusted forecasts and profile of payment percentages following the latest outturn of scheme data in November 2021 and the agreement to set the 2022 payment percentage at 15%.
Table 5: adjusted forecasts and profile of payment percentages
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Growth rate of total measured sales | 1.75% | 2.58% | 9.38% | - | - |
| Adjusted forecast of the growth rate of total measured sales | - | - | - | 5.79% | 5.48% |
| New active substance (NAS) and medium-sized company exempted (MSE) sales as a share of voluntary scheme measured sales | 3.25% (LOFEX%1c) |
5.56% (LOFEX%2c) |
5.66% (LOFEX%3c) |
- | - |
| Adjusted forecast NAS and MSE sales as a share of voluntary scheme measured sales | - | - | - | 7.32% (FaEX%4) |
7.61% (FaEX%5) |
| Annual payment percentage | 9.6% (P%1) |
5.9% (P%2) |
5.1% (P%3) |
15.0%[footnote 1] (P%4) |
- |
| Estimated future annual payment percentage | - | - | - | - | 26.0%[footnote 2] |
General notes
Note 1: the information in all tables is that held on the DHSC’s database at 17 November 2021.
Note 2: totals may not sum due to rounding.
Note 3: all tables are subject to future correction, such as where audited data replaces best available data. The audit and reconciliation arrangements are set out in paragraphs 4.26 to 4.31 of the 2019 voluntary scheme for branded medicines pricing and access.
-
The payment percentage in 2022 is set at 15% rather than 19.1%, which would be the payment percentage had the amendments described in the ‘Overview’ section not been made. ↩
-
The estimated future payment percentage for 2023 is calculated using scheme mechanics on the basis of current sales growth estimates in 2021, 2022 and 2023, and a 15% payment percentage in 2022. This projection is not a forecast or prediction and will be updated as we get more data. The estimated payment percentage may decrease should unusually high sales growth not persist into 2022. ↩