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PART 1 U.K.PAYMENT SCHEME

Payment schemeU.K.

3.—(1) Subject to [F1paragraphs F2... (4) and (5A)], the manufacturer or supplier that is responsible for the first relevant supply of an item of presentation must pay [F3for the applicable period specified in the first column of the table below, the payment percentage specified in the corresponding entry in the second column of that table] of the net sales income received in respect of that supply to the Secretary of State in accordance with Schedule 1.

Table

Applicable periodPayment percentage
[F41st January 2024 to the end of 202421.9%
1st January 2025 to the end of 202524.0%
1st January 2026 to the end of 2026 and any subsequent calendar year26.8%]

[F5(1A) Where, in respect of an applicable period, as a consequence of an amendment to these Regulations, there is an amendment (in any manner) of a payment percentage specified in the second column of the table, the applicable payment percentage for payments payable under paragraph (1) in respect of supplies of an item of presentation under any contract entered into on or after 1st January 2019, including—

(a)a contract with a contracting authority based on a framework agreement where that framework agreement was entered into following a tender which closed on or after 1stJanuary 2019; or

(b)a public contract entered into following a tender which closed on or after 1st January 2019,

is, for that applicable period, the amended percentage.]

F6(1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7(1C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) Subject to paragraph (3), for these purposes the first relevant supply is the first occasion on which that item of presentation is supplied by any manufacturer or supplier having a place of business in the United Kingdom (MS1) to another person having a place of business in the United Kingdom (MS2) that is not in the same group as MS1.

(3) If MS2 is—

(a)the marketing authorisation holder (MAH) in respect of that item of presentation; or

(b)a manufacturer or supplier in the same group as MAH,

the first relevant supply is the next supply of that item of presentation to a person having a place of business in the United Kingdom that is not in the same group as MS2.

(4) Subject to paragraph (5), paragraph (1) does not apply to the net sales income received in respect of the supply of—

(a)any item of presentation which was in respect of that supply, supplied under—

(i)a contract with a contracting authority based on a framework agreement where that framework agreement was entered into on or before the date of the coming into force of these Regulations or was entered into following a tender which closed on or before the date of the coming into force of these Regulations,

(ii)a public contract entered into on or before the date of the coming into force of these Regulations or was entered into following a tender which closed on or before the date of the coming into force of these Regulations;

(b)any item of low cost presentation;

(c)any item of parallel distributed presentation;

(d)any item of voluntary scheme [F8presentation;]

[F9(e)any item of new active substance presentation during the period beginning on the date on which the marketing authorisation is granted for the first therapeutic indication of the presentation and ending on the last day of the 36th month after that date;

(f)any item of presentation which is a line extension of a new active substance presentation to which sub-paragraph (e) applies which is supplied during the period referred to in sub-paragraph (e) for the new active substance presentation;

(g)any item of exceptional centrally procured presentation;

(h)any item of centrally procured vaccine presentation.]

(5) Paragraph (4)(a) does not apply to any item of presentation added to a framework agreement or public contract after the coming into force of these Regulations.

[F10(5A) Where paragraph (5B) applies, the payment percentage referred to in paragraph (1) for the applicable period is 7.80% and not the percentage specified in the corresponding entry for that applicable period in the second column of the table.

(5B) Subject to paragraph (5C), this paragraph applies in respect of payments payable under paragraph (1) in respect of supplies of an item of presentation under—

(a)a contract with a contracting authority based on a framework agreement where that framework agreement was entered into on or after 1st April 2018 but before 1st January 2019, or was entered into following a tender which closed on or after 1st April 2018 but before 1st January 2019;

(b)a public contract entered into on or after 1st April 2018 but before 1st January 2019 or was entered into following a tender which closed on or after 1st April 2018 but on or before 1st January 2019.

(5C) Paragraph (5B) does not apply to payments payable in respect of supplies of any item of presentation added to a framework agreement or public contract that falls within paragraph (5B)(a) or (b) where that item is added on or after 1st January 2019.]

[F11(5D) For the purposes of paragraph (4)(e)—

(a)“new active substance presentation” means a presentation containing a new active substance with a marketing authorisation incorporating the first therapeutic indication for that active substance, but not other presentations marketed under a different brand name which nevertheless contain that new active substance (whether alone or in combination with other active substances); and

(b)a presentation is only to be considered to contain a new active substance where confirmation that the presentation contains a new active substance is provided by—

(i)a European Public Assessment Report published by the European Medicines Agency in relation to the presentation in accordance with Article 13.3 of the Regulation (EC) 726/2004 of the European Parliament and of the Council of 31st March 2004 laying down Community procedures for the authorisation and supervision of medicinal products for human and veterinary use and establishing a European Medicines Agency, or

(ii)a assessment report published by the licensing authority in accordance with regulation 64(6) of the 2012 Regulations.

(5E) For the purposes of paragraph (4)(f), “line extension” means a new presentation with the same active substance as another presentation which is marketed under the same brand name and by the same manufacturer or supplier but is distinguishable by reference to its strength, an excipient, its pack size, its method of administration or its formulation.

(5F) For the purposes of paragraph (4)(g), “exceptional centrally procured presentation” means a presentation which—

(a)is part of stock procured by the Secretary of State;

(b) is procured for the purpose of emergency preparedness or stockpiling for national security or pandemic preparedness; and

(c)either—

(i)UKHSA manages the stockpiling and distribution of the relevant presentation, or

(ii)the Secretary of State gives a direction to the manufacturer or supplier to the effect that paragraph (i) need not be satisfied in relation to the relevant presentation.

(5G) For the purposes of paragraph (4)(h), “centrally procured vaccine presentation” means a presentation which—

(a)is part of stock procured by the Secretary of State;

(b)is a vaccine procured in accordance with a recommendation made or advice given by the Joint Committee on Vaccination and Immunisation—

(i)for a national vaccination programme, or

(ii)for a branded medicine to be included in a national vaccination programme; and

(c)either—

(i)UKHSA manages the distribution of the vaccine as part of a national vaccination programme, or

(ii)the Secretary of State gives a direction to the manufacturer or supplier to the effect that paragraph (i) need not be satisfied in relation to the relevant presentation.

(5H) In this regulation—

“active substance” has the meaning given in regulation 8(1) of the 2012 Regulations;

“licensing authority” is to be construed in accordance with regulation 6 of the 2012 Regulations;

“UKHSA” means the executive agency of the Department of Health and Social Care known as the United Kingdom Health Security Agency; and

“vaccine” has the meaning given in regulation 8(1) of the 2012 Regulations.]

(6) This regulation does not apply to a small manufacturer or supplier.

Textual Amendments

Direction to make a paymentU.K.

4.—(1) This regulation applies where the Secretary of State considers that a manufacturer or supplier has entered into an arrangement whose main purpose or one of whose main purposes is to reduce or avoid a payment in respect of a sale of any item of presentation that either that or another manufacturer or supplier would otherwise be liable to make under regulation 3.

(2) Where this regulation applies the Secretary of State may give a direction to any manufacturer or supplier that has entered into such an arrangement to do either or both of the following—

(a)pay the amount so reduced or avoided in relation to such a sale;

(b)pay [F12the relevant payment percentage referred to in [F13regulation 3(1) F14... or (5A)]] in respect of any future sale of any item of that presentation under that arrangement in accordance with Schedule 1.

(3) Any direction given under paragraph (2) must specify—

(a)the reason why the Secretary of State considers that the manufacturer or supplier should pay the amount;

(b)the reduced or avoided amount of payment that the manufacturer or supplier must pay to the Secretary of State in relation to the sale referred to in paragraph (2)(a) and the period within which it must be paid;

(c)whether the manufacturer or supplier is required to pay [F15the relevant payment percentage referred to in [F16regulation 3(1) F17... or (5A)]] in respect of the sale referred to in paragraph (2)(b); and

(d)the manufacturer's or supplier's appeal rights.

(4) In this regulation—

“an arrangement” includes any scheme, arrangement or understanding, whether or not legally enforceable;

“supplier” means any person who supplied any item of presentation and is not limited to circumstances where that supply is by way of sale.

(5) This regulation does not apply to a small manufacturer or supplier.

Textual Amendments

Interest payable on late paymentU.K.

5.—(1) Paragraph (2) applies where—

(a)the whole or any part of the amount required to be paid by a manufacturer or supplier under regulation 3 is not paid in accordance with table 1 of Schedule 1 and so an amount is overdue; or

(b)the whole or any part of the amount required to be paid by a manufacturer or supplier under a direction given under regulation 4 is not paid in accordance with that direction, and so an amount is overdue.

(2) Where this paragraph applies, the manufacturer or supplier is liable to pay to the Secretary of State interest, calculated in accordance with paragraph (3) read with regulation 1(4) and 7(4), on the amount referred to in paragraph (1)(a) or (b) which is overdue until that amount is paid.

(3) The interest payable under paragraph (2) shall be simple interest calculated from day to day at a rate of 2.5 per cent per annum over the Bank of England base rate as it may be from time to time and applied to any amount outstanding on that day.

(4) For the purpose of this regulation—

the “Bank of England base rate” means—

(a)

the rate announced from time to time by the Monetary Policy Committee of the Bank of England as the official dealing rate, being the rate at which the Bank is willing to enter into transactions for providing short term liquidity in the money markets; or

(b)

where an order under section 19 of the Bank of England Act 1998 M1 (reserve powers) is in force, any equivalent rate determined by the Treasury under that section.

Marginal Citations

PenaltiesU.K.

6.—(1) Paragraph (2) applies where—

(a)the whole or any part of the amount required to be paid by a manufacturer or supplier under regulation 3 is not paid in accordance with table 1 of Schedule 1 and so an amount is overdue; or

(b)the whole or any part of the amount required to be paid by a manufacturer or supplier under a direction given under regulation 4 is not paid in accordance with that direction, and so an amount is overdue.

(2) Where this paragraph applies, the manufacturer or supplier is liable to pay to the Secretary of State a penalty, calculated on a daily basis in accordance with Schedule 5 read with regulations 1(4) and 7(4), until the overdue amount referred to in paragraph (1)(a) or (b) is paid.

Demands and appealsU.K.

7.—(1) Paragraph (2) applies where—

(a)the whole or any part of the amount required to be paid by a manufacturer or supplier under regulation 3 is not paid in accordance with table 1 of Schedule 1 and so an amount is overdue; or

(b)the whole or any part of the amount required to be paid by a manufacturer or supplier under a direction given under regulation 4 is not paid in accordance with that direction, and so an amount is overdue.

(2) Where this paragraph applies the Secretary of State may make a demand for payment from the manufacturer or supplier in respect of the overdue amount.

(3) A demand made under paragraph (2) must be issued by way of a written notice to that manufacturer or supplier and must state—

(a)the overdue amount referred to in paragraph (1)(a) or (b);

(b)the amount of interest calculated in accordance with regulation 5(3) up to the date on which the demand is made;

(c)the amount of penalty calculated in accordance with regulation 6(2) up to the date on which the demand is made;

(d)the daily rate at which the interest and penalty continues to accrue for as long as the amount referred to in paragraph (1)(a) or (b) continues to be overdue; and

(e)the manufacturer's or supplier's appeal rights.

(4) If a manufacturer or supplier sends a notice of an appeal to the Tribunal in accordance with regulation 4 of the Health Service Medicines (Price Control Appeal) Regulations 2000 M2, in respect of a demand issued by way of a written notice under paragraph (3), the period beginning on the date that the notice is received by the Tribunal to the date on which the appeal is finally determined or is withdrawn is discounted for the purposes of the calculation of the number of days in respect of which an amount referred to in paragraph (1)(a) or (b) is overdue.

Marginal Citations

M2S.I. 2000/124 as amended by S.I. 2000/870 and 2007/1898.