In England, to gain a positive recommendation for use within the NHS from the National Institute of Health and Care Excellence (NICE), pharmaceutical products must demonstrate cost-effectiveness. In order to achieve this, manufacturers often agree financial agreements with NHS England. Indeed, the use of such agreements to improve the cost effectiveness of products has increased substantially in recent years.

In line with the 2014 Pharmaceutical Pricing Regulation Schemes (PPRS), financial agreements in England have typically been in the form of patient access schemes (PAS). In most cases, PAS involve simple discounts, with the manufacturer providing a confidential discount to the list price of the product. These agreements have often been favoured due to their relative ease of arrangement and transactability. However, PAS may also involve complex arrangements such as the provision of free stock, dose caps or (less frequently) payments by results. These have generally been less favoured due to the increased time and resource requirements for implementation. Indeed, as of July 2019, the NICE website lists 217 appraisals with an approved PAS in place, of which only 10% are complex arrangements.

The use of PAS has played an important role in allowing manufacturers to demonstrate cost-effectiveness and gain patient access. However, there are questions around whether such mechanisms are sufficient to facilitate access for the launch of increasingly innovative products, such as advanced therapy medicinal products (ATMPs). These products, which include gene therapies, have the potential of being “one time only” technologies, with high price-tags. NICE are expected to be faced with seven appraisals for ATMPs in the near future, followed by a further 20 to 30 in the longer term. This is expected to result in challenges of cost-effectiveness, affordability and high uncertainty of long-term outcomes. As a result, there is a growing need, both in England and across markets, for more complex and flexible commercial arrangements.

The 2019 Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) set out a commitment for an evolution in commercial arrangements in England, allowing increased flexibility and complexity for bespoke financial arrangements. The new commercial framework is being developed by NHS England, with input from both NICE and industry and has the potential to be beneficial for access arrangements for ATMPs. NHS England’s Chief Executive Simon Stevens has previously mentioned enhanced agreements could include outcomes-based, annuity-based and volume-based pricing deals, although specifics of the commercial framework have not yet been published. During transition from the 2014 PPRS to 2019 VPAS, and whilst development of the commercial framework is ongoing, existing simple and complex PAS will continue to operate and be available for new products using existing processes.

Whilst details of the new commercial framework is limited, it is known that it will be open to both members of VPAS and companies subject to the Branded Health Medicines Schemes (previously known as the Statutory Scheme). In the past, PAS have only been available to members of the PPRS. Whilst companies covered by the Branded Health Medicines Scheme have been able to form agreements with the Department of Health, these agreements have not been called PAS. Offering the same opportunities and utilising consistent language for agreements with all pharmaceutical companies (whether or not they are part of VPAS) is likely to be a welcomed change.

The commercial framework will also incorporate enhanced horizon scanning and encourage proactive and early engagement between NHS England and industry to ensure alignment on mutually beneficial objectives and avoid unnecessary delays. Indeed, during the 2019 NICE Conference, Carla Deakin (Programme Direct, Commercial and Managed Access, NICE), emphasised the growing importance of the NICE Commercial Liaison Unit in providing a systematic interphase between NICE, NHS England and manufacturers. Allowing NHS England input to be sought prior to/at the beginning of the technology appraisal process rather than towards the end of the process is likely to streamline the pathway to patient access.

Nevertheless, whilst enhanced commercial arrangements will offer manufacturers the opportunity for earlier discussions and more complex arrangements, these are likely to require greater resource and implementation investment from NHS England compared to existing arrangements. During the 2019 NICE Conference, it was noted that it is likely products with the most complex arrangements (and therefore associated with most implementation burden) will be required to be cost-effective at the lower-end or below NICE’s cost-effectiveness threshold to account for this additional resource investment.

Overall, for the past decade, financial agreements in England have primarily involved simple and complex PAS, with the latter generally being limited to dose caps and free stock deals. The 2019 VPAS has committed to the publication for a commercial framework allowing enhanced commercial arrangements, which will enable bespoke, flexible and innovative agreements to be made on a case-by-case basis. In recent years, there have been examples of NHS England and manufacturers being stuck in difficult negotiations, most notably over Vertex’s Orkambi (lumacaftor/ivacaftor) for cystic fibrosis. Ideally, earlier NHS Engagement and enhanced flexibility on commercial arrangements will allow protracted discussions such as these to reduce. However, it should be noted that enhancing complexity of financial arrangements is likely to require significant upfront time for planning and negotiating, which may have the potential to delay access if significant implementation challenges are faced.

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