UK Health Minister Jane Kennedy today announced details of the long-term arrangements for reimbursement of NHS generic medicines. The new arrangements will generate annual savings of £300m and will replace the Maximum Price Scheme introduced in August 2000.

There will be two new voluntary schemes - Schemes M and W. Scheme M will apply to manufacturers of NHS generic medicines and Scheme W will apply to wholesalers.

Under the new schemes, manufacturers will provide information that will allow quarterly revisions to the new Category M in part VIII of the Drug Tariff. Where this data is not received from manufacturers, the prices may be determined from information provided by wholesaler members of Scheme W.

Jane Kennedy said

"Generic medicines play a crucial role in the NHS. They play a key part in clinical treatment in primary care. Their use also releases substantial savings for redeployment in other areas of healthcare.

"These new arrangements will further promote a transparent and competitive market for NHS generic medicines whilst generating annual savings of some £300 million. These savings will be channelled towards the new pharmacy contract which recognises the vital role that pharmacist will play in providing and supporting a reliable service that meets patients' clinical needs".

Category M applies to some medicines previously in Category A of the Drug Tariff and was introduced in April 2005. The basic prices of Category M medicines reflect the average manufacturers' market prices after discount, rather than being based on the Category A system of basket prices before discount.

Both schemes M and W are covered by voluntary arrangements under Section 33 of the Health Act 1999. Those that decide not to join the relevant scheme will be subject to a statutory scheme under Sections 34-38 of the Health Act 1999.

80% of prescription items are written generically.

The Scheme is expected to operate for not less than 5 years from 1st April 2005

Members of Schemes M&W will provide quarterly information on volumes, net sales values and net acquisition costs. This information will be used to calculate the reimbursement prices of category M generic medicines.

These arrangements were developed following the widespread rejection of those proposed in the discussion paper Options for the Future Supply and Reimbursement of Generic Medicines for the NHS, published July 2001.

The Scheme applies to all generic licensed NHS medicines dispensed in the community in England that previously qualified to fall under category A of the Drug Tariff.


Further details on the schemes can be found on the DH website after 2.30pm on 29th June:

-GNNREF: 117268 - Issued by : DOH Press Office