The Branded Health Service Medicines (Costs) Regulations 2018

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which apply to the United Kingdom, make a statutory scheme for the purposes of requiring specified manufacturers and suppliers who supply an item of presentation to pay to the Secretary of State an amount calculated by reference to the net sales income or where specified, estimated net sales income received for the supply of that item of presentation. These Regulations also make a statutory scheme for the purpose of limiting the price which may be charged by manufacturers and suppliers for the supply of an item of presentation.

These Regulations require specified manufacturers and suppliers to record, keep and provide information to the Secretary of State for the purposes of operating the statutory scheme.

Regulation 1 provides for citation, commencement and interpretation and includes a definition of relevant medicines, presentation, net sales income and unbranded generic health service medicines.

Regulation 2 provides that the statutory scheme made under these Regulations does not apply to a manufacturer or supplier to whom, a voluntary scheme applies.

Part I of these Regulations concerns the operation of the payment mechanism.

Regulation 3 requires the specified manufacturer or supplier to pay to the Secretary of State 7.80% of its net sales income received for the supply of an item presentation in accordance with Schedule 1.

Regulation 4 provides for the Secretary of State to give a direction to a manufacturer or supplier to make a payment, where a manufacturer or supplier has entered into arrangements whose main purpose or one of whose main purposes is to reduce or avoid a payment due under regulation 3.

Regulation 5 provides that a manufacturer or supplier is liable to interest where an amount due under regulation 3 or under a direction given under regulation 4 is overdue.

Regulation 6 provides that a manufacturer or supplier is liable to pay a penalty calculated in accordance with Schedule 5 with respect to an amount due under regulations 3 or under a direction given under regulation 4 is overdue.

Regulation 7 makes provision for the Secretary of State to issue a written notice to demand payment of the interest referred to in regulation 5 or the penalty referred to in regulation 6.

M1 Part II of these Regulations makes provision for the maximum price which may be charged by a manufacturer or supplier for the supply of an item of a presentation .

Regulation 8 specifies that except where a direction has been given by the Secretary of State in accordance with these Regulations, the maximum price will be as follows. With respect to presentations launched before 1^st December 2013, the maximum price will be the price at which that presentation was on sale for health service purposes on 1^st December 2013, as determined by the Secretary of State, or where a price increase was agreed by the Secretary of State in accordance with regulation 6 of the Health Service Branded Medicines (Control of Prices and Supply of Information) (No.2) Regulations 2008, that increased price. Where the presentation was launched after 1^st December 2013, the maximum price will be the price as specified by the Secretary of State in accordance with regulation 3 of the Health Service Branded Medicines (Control of Prices and Supply of Information)(No.2) Regulations 2008, or where a price was agreed by the Secretary of State in accordance with regulation 6 of those Regulations, that increased price.

Regulation 9 makes provision for the Secretary of State to specify the maximum price by direction where that presentation is a new presentation.

Regulation 10 makes provision for the Secretary of State to exempt presentations from the maximum price by direction where it is necessary to ensure adequate supplies of that presentation for health service use.

Regulation 11 makes provision for the Secretary of State to increase the maximum price of a presentation by direction.

Regulation 12 makes provision for the Secretary of State to decrease the maximum price of a presentation by direction.

Regulation 13 makes provision for the Secretary of State to specify the maximum price of a presentation where a manufacturer or supplier has left a voluntary scheme.

Regulations 14 to 17 make provision for enforcement of the controls on the prices of presentations. Regulation 14 provides that a manufacturer or supplier will be liable to a recoverable sum calculated in accordance with Schedule 4, regulation 15 provides that a manufacturer or supplier will be liable to interest where the payment of that recoverable sum is overdue and regulation 16 provides that a manufacturer or supplier is liable to pay a penalty where a manufacturer or supplier supplies an item of presentation at a price in excess of the maximum price permitted by regulation 8. Regulation 17 makes provision for the Secretary of State to issue a written notice demanding payment of the recoverable sum, interest or penalty.

Part III of these Regulations concerns the provision of information.

Regulation 18 provides for a manufacturer or supplier required to make payments under regulation 3 or a direction given under regulation 4 to record, keep and provide information in accordance with Schedule 1.

Regulation 19 makes provision for new manufacturers or suppliers required to make payments under regulation 3 or a direction given under regulation 4 to record, keep and provide information in accordance with Schedule 3.

Regulation 20 makes provision for small manufacturers or suppliers to record, keep and provide information in accordance with Schedule 2.

Regulation 21 specifies the information that needs to be provided by a manufacturer or supplier where a manufacturer or supplier is required to provide a sales report.

Regulation 22 specifies the information that needs to be provided by a manufacturer or supplier where a manufacturer or supplier is required to provide a presentation report.

Regulation 23 sets out the form in which information which is required to be audited needs to be provided.

Regulation 24 specifies that information provided to the Secretary of State needs to be accompanied by a written declaration of approval.

Regulation 25 makes provision for the Secretary of State to specify the amount due and the information required on review of information provided by a manufacturer or supplier.

Regulation 26 and Schedule 5 makes provision for enforcement of the information provisions.

Part VI concerns the general provision of the statutory scheme.

Regulation 27 makes provision for appeals against enforcement decisions made by the Secretary of State.

Regulation 28 revokes the Health Service Medicines (Information Relating to Sales of Branded Medicines etc.) Regulation 2007 and the Health Service Branded Medicines (Control of Prices and Supply of Information)(No.2) Regulations 2008 except in relation to any liability of a person to make payments under those Regulations which existed before the coming into force date of these Regulations.

Regulation 29 requires the Secretary of State to review the operation and effect of these Regulations and publish a report setting out the conclusions of that review a year after the commencement of these Regulations and annually after that.

An impact assessment relating to this instrument has been prepared and copies can be obtained from the Department of Health and Social Care, 39 Victoria Street, London, SW1H 0EU.