The Pharmaceutical Price Regulation Scheme (PPRS) operates by capping overall growth in expenditure on branded medicines within the scope of the scheme. Innovative medicines, defined as those containing a new active substance, have freedom of pricing at launch under the terms of the scheme. The National Institute for Health and Care Excellence assesses cost-effectiveness of the medicine and under the terms of the PPRS companies may offer discounts through a patient access scheme in order to secure a cost-effective price.
In order for NHS England to manage affordability of any particular medicine a budget impact test may trigger a further commercial discussion with a company if the cost of the medicine may exceed £20 million in any of the first three years. Taken together these arrangements balance patient access to innovative cost-effective medicines with access to appropriate treatment for all patients, and secure best value for the taxpayer and a clear route to market for companies.