Is the VPAS Scheme doing more harm than good?

Jan 30, 2023 | UK Brands

Although the aim of the VPAS scheme is to support innovation and better patient outcomes, alongside keeping a lid on the NHS drug budget, could the scheme actually be doing the opposite? If the rebate is unsustainable, and results in loss making products for manufacturers, we could see withdrawal from the market, driving supply challenges and increases in market pricing.

The 2023 VPAS rebate has been set at 26.5% for all branded products with annual sales over £5m. We’ve taken a look at 247 originator brands to assess profitability and market attractiveness.
Clearly, we don’t have the manufacturing costs, one statistical technique is to replace an unknown price with one which is well understood. This allows an estimate to be calculated and provides some clarity where no data previously existed – in this instance we have used the Drug Tariff of the equivalent generic product.

It’s notable that although average profitability is 58%, some products are as low as -117%.

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