The British Generic Manufacturers Association (BGMA) is seeking a judicial review of the government’s decision to grant the membership body ‘observer’ status in negotiations around a new tax scheme for branded medicines.
The ‘Voluntary pricing and access scheme’ (VPAS) currently requires manufacturers of branded medicines to pay the government 26.5% of their net income from sales of branded medicines to the NHS.
However, the VPAS is due to end on 31 December 2023, with the government and the Association of the British Pharmaceutical Industry (ABPI), which represents manufacturers of branded medicines, expected to renegotiate a new scheme before the autumn.
Mark Samuels, chief executive of the BGMA, said in a statement on 21 April 2023 that it had requested “full participation in the negotiations with the government last November ” but had instead been “offered observer status in relation to the negotiations”.
“This is not sufficient given the existential impact the rate is, and will have, on branded generic and biosimilar manufacturers,” he said.
“We also do not believe the ABPI — who are the only party with whom the government currently negotiates [on VPAS] — 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.”
Samuels noted that “four out of ten products in the current scheme are branded generics or biosimilars”.
“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,” he added.
In January 2023, Samuels warned that branded generic manufacturers will cut back on medicine supplies to the UK if tax rates on company profits continue to increase.
The VPAS levy has quadrupled since 2019, when the clawback on profits for branded medicines was just 9.6%.
This increase has led to disquiet among pharmaceutical manufacturers, with warnings that increasing rates could result in drug companies taking their research and manufacturing outside of the UK, delays in accessing new treatments for NHS patients and a reduction in the supply of existing medicines.
Commenting on the judicial review, Richard Torbett, chief executive of the ABPI, said: “We are disappointed that the BGMA has decided to take this action, but we recognise that it has been perpetuated by the extreme challenge placed on all parts of the industry from the surge in the branded medicine payment rates.”
He added: “We now look forward to starting detailed discussions with the government as soon as possible to ensure timely agreement of a new voluntary scheme.”