The Branded Health Service Medicines (Costs) (Amendment) Regulations 2025
The Branded Health Service Medicines (Costs) (Amendment) Regulations 2025 modify the 2018 regulations governing payments from manufacturers and suppliers of branded medicines.
Key changes include altering payment percentages for different periods and updating auditing requirements for presentation reports, allowing an alternative 'agreed upon' procedure instead of a full audit.
The amendments aim to improve efficiency, ensure fair payment, and streamline administrative processes.
Arguments For
Improved Efficiency and Transparency: The amendments aim to streamline the payment scheme for branded medicines, potentially improving efficiency in the process and increasing transparency for all stakeholders.
Financial Fairness: The adjusted payment percentages could ensure a more equitable distribution of funds, balancing the interests of manufacturers, suppliers, and the health service. Evidence cited in the explanatory note suggests the changes are made to provide fair payment percentages.
Streamlined Auditing: The changes to auditing requirements provide manufacturers and suppliers with an alternative, potentially more efficient, auditing procedure for presentation reports, reducing administrative burdens.
Legal Basis: The regulations are made under the powers expressly conferred under the National Health Service Act 2006, section 263(1)(b) and (c), section 264(1) and (3), section 264A(2), (4) and (7), section 266(1) and section 272(7)(a) and (b) and (8). The Secretary of State consulted as required under sections 263(1) and (1A), 264(1) and 264C(1).
Arguments Against
Potential for Increased Costs: While the goal is efficiency, the new regulations could inadvertently increase administrative costs for manufacturers and suppliers, requiring additional resources to comply with updated requirements.
Unforeseen Consequences: Changes in payment percentages may have unintended consequences on market dynamics, possibly affecting the availability or pricing of certain branded medicines.
Complexity of the System: The amendment introduces additional subsections, potentially increasing the complexity and difficulty of understanding the payment scheme regulations.
Alternative Approaches: There may be other, less complex methods to adjust payments and manage auditing of presentation reports that were not considered.
The Secretary of State for Health and Social Care makes these Regulations in exercise of the powers conferred by sections 263(1)(b) and (c), (2) and (5), 264(1) and (3), 264A(2), (4) and (7), 266(1) and 272(7)(a) and (b) and (8) of the National Health Service Act 2006 having had regard to the matters specified in section 266(3), (4) and (4A) of that Act.The Secretary of State has consulted in accordance with sections 263(1) and (1A), 264(1) and 264C(1) of that Act.
The Secretary of State for Health and Social Care created these regulations using powers granted by the National Health Service Act 2006.
They also followed the Act's requirements for consultation before making these changes.
- Citation, commencement and extent (1) These Regulations may be cited as the Branded Health Service Medicines (Costs) (Amendment) Regulations 2025 and come into force on 1st July 2025. (2) These Regulations extend to England and Wales, Scotland and Northern Ireland.
These regulations are officially titled the 'Branded Health Service Medicines (Costs) (Amendment) Regulations 2025' and come into effect on July 1, 2025.
They apply across the whole of the United Kingdom.
- Amendments to the Branded Health Service Medicines (Costs) Regulation 2018 The Branded Health Service Medicines (Costs) Regulations 2018 are amended as follows.
This section announces that the regulations amend the existing Branded Health Service Medicines (Costs) Regulations 2018.
The specific amendments are detailed in subsequent sections.
- Amendments to regulation 3 (1) Regulation 3 (payment scheme) is amended as follows. (2) In paragraph (1)— (a) for “paragraphs (1AA), (4) and (5A)” substitute “paragraphs (1AA), (1AB), (4) and (5A)”; and (b) for the table substitute the following table— “Table | Applicable Period | Newer presentation payment percentage | Older presentation payment percentage | |------------------------------------|---------------------------------------|---------------------------------------| | 1st July 2025 to the end of 2025 | 23.4% | 10.6% | | 1st January 2026 to the end of 2026 | 24.3% | 11% | | 1st January 2027 and any subsequent calendar year | 26.0% | 10.9%”. (3) After paragraph (1AA) insert— (1AB) Where paragraph (1AC) applies, the newer presentation payment percentage referred to in paragraph (1) for the period beginning on 1st July 2025 and ending at the end of 2025 is 31.3% and not 23.4%. (1AC) This paragraph applies in the case of the payments payable under paragraph (1) by a manufacturer or supplier in respect of supplies during the period beginning on 1st July 2025 and ending at the end of 2025, if, in respect of any of supply of an item of presentation that was a newer presentation of that manufacturer or supplier— (a) a payment was payable under paragraph (1) in respect of a supply during the period beginning on 1st January 2025 and ending at the end of 30 June 2025; and (b) the applicable payment percentage was 15.5%.”
This section details amendments to Regulation 3, which outlines the payment scheme.
It replaces an existing table of payment percentages with updated figures for various periods starting July 1, 2025.
It also adds new paragraphs (1AB) and (1AC), which introduce an exception for manufacturers who made payments at 15.5% in the first half of 2025 — they'll now pay 31.3% in the second half of 2025, rather than the standard rate within the newer table.
- Amendments to regulation 4 In regulation 4 (direction to make a payment)— (a) in paragraph (2)(b) for “regulation 3(1) or (5A)” substitute “regulation 3(1), (1AA), (1AB) or (5A)”; and (b) in paragraph (3)(c) for “regulation 3(1) or (5A)” substitute “regulation 3(1), (1AA), (1AB) or (5A)”.
This section makes consequential amendments to Regulation 4, which deals with directions to make payments.
These changes update the references to Regulation 3 to account for the newly added subsections (1AB).
- Amendment to regulation 23 In regulation 23 (audited information)— (a) after paragraph (1B) insert— (1C) A manufacturer or supplier who provides a presentation report to the Secretary of State in accordance with Schedule 1 or Schedule 3 must, at the same time as providing an audited sales report, provide the Secretary of State with— (a) a statement from the manufacturer or supplier that the most recently submitted presentation report has been subject to procedures agreed between the manufacturer or supplier and a qualified independent auditor in accordance with an applicable related services standard; and (b) the relevant report of the qualified independent auditor produced in accordance with the applicable related services standard; and (b) in paragraph (2), omit “and” after the definition of “applicable auditing standards” and insert the following definition in the appropriate place— “applicable related services standard” means any relevant International Standard on Related Services recognised by, or equivalent standard produced by, the Financial Reporting Council Limited; and.
These changes to Regulation 23, concerning audited information, add a new paragraph (1C) requiring manufacturers and suppliers to submit a statement confirming that their presentation report underwent an agreed-upon procedure with a qualified auditor.
It also adds a definition of 'applicable related services standard', modifying the previous auditing requirement for presentation reports.
Signed by the authority of the Secretary of State for Health and Social Care. Karin Smyth Minister of State Department of Health and Social Care 9th June 2025
This section shows the signature and authorization of the Minister of State, Department of Health and Social Care, confirming the regulations' official adoption on June 9, 2025.
Explanatory Note (This note is not part of the Regulations) These Regulations amend the Branded Health Service Medicines (Costs) Regulations 2018 (S.I. 2018/345) (the “Statutory Scheme Regulations”). The Statutory Scheme Regulations, amongst other matters, make a scheme for the purpose of requiring specific manufacturers and suppliers of branded medicines for health service use to pay certain amounts to the Secretary of State. These amounts are calculated by reference to the net sales income or estimated net sales income from supplies of such medicines. Regulation 3(2) makes provision to replace the payment percentages in the table in regulation 3(1) of the Statutory Scheme Regulations with new payment percentages of net sales income to be payable from the 1st July 2025 for each applicable period. Regulation 3(3) inserts new paragraphs (1AB) and (1AC) into regulation 3 of the Statutory Scheme Regulations. These new provisions mean that a manufacturer or supplier who was required to make a payment on a supply of a medicine under regulation 3(1) at 15.5%, with respect to the period beginning with 1st January 2025 and ending at the end of 30th June 2025, will be subject to a newer presentation payment percentage of 31.3% on their supplies for the period beginning 1st July 2025 to the end of 2025. This is instead of the 23.4% as stated in the table in regulation 3(1), which would otherwise apply. Regulation 4 makes consequential amendments to regulation 4 of the Statutory Scheme Regulations. Regulation 5 inserts new paragraph (1C) and a new defined term into paragraph (2) of regulation 23 of the Statutory Scheme Regulations that alter the auditing arrangements for presentation reports. These changes allow manufacturers and suppliers to carry out an alternate assurance procedure, known as an agreed upon procedure, of their presentation reports in place of a full audit. 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 and is available on the www.legislation.gov.uk website.
The explanatory note summarizes the regulations' purpose, which is to amend the 2018 regulations governing payments from manufacturers and suppliers of branded health service medicines.
It details amendments made to payment percentages in Regulation 3 and changes to auditing arrangements in Regulation 23, allowing for alternate auditor procedures.
It also mentions the impact assessment prepared and made available for review.