uksi/2018/345 — The Branded Health Service Medicines (Costs) Regulations 2018

2018 No. 345 National Health Service, England And Wales National Health Service, Scotland Health And Personal Social Services, Northern Ireland The Branded Health Service Medicines (Costs) Regulations 2018 Made 8th March 2018 Laid before Parliament 9th March 2018 Coming into force 1st April 2018 The Secretary of State for Health and Social Care makes the following Regulations in exercise of the powers in sections 263(1), (2), (4), (5A) and (6), 264A(2), (5) and (7), 265(1), (3), (4), (5) and (5A), 266(1) and (2) and 272(7) and (8) of the National Health Service Act 2006 and in accordance with sections 266(3), (4) and (4A) of that Act. The Secretary of State has consulted in accordance with sections 263(1), 263(1A), 264C(1) and 265(9) of the National Health Service Act 2006. Citation, commencement and interpretation 1 1 These Regulations may be cited as the Branded Health Service Medicines (Costs) Regulations 2018 and come into force on 1st April 2018. 2 In these Regulations— “ the 1978 Act ” means the National Health Service (Scotland) Act 1978 ; “ the 2006 Act ” means the National Health Service Act 2006; “ the 2006 Wales Act ” means the National Health Service (Wales) Act 2006 ; “ the 2008 Regulations ” means the Health Service Branded Medicines (Control of Prices and Supply of Information)(No.2) Regulations 2008 ; “ the 2012 Regulations ” means the Human Medicines Regulations 2012 ; “ accounting reference date ” has the meaning given to it under section 391 of the Companies Act 2006 ; “ accounting reference period ” has the meaning given to it under section 391 of the Companies Act 2006; “ audited sales report ” means a sales report audited in accordance with regulation 23(1); “biological medicinal product” has the meaning given to it by regulation 8(1) of the 2012 Regulations; “ branded medicine ” means a medicinal product to which a brand name has been applied that enables the medicine to be identified without reference to the common name; “ calendar quarter ” means a period of three months beginning on— 1st January; 1st April; 1st July; or 1st October; “ calendar year ” means a period of 12 months beginning on 1st January; “ combination medicine ” is to be construed in accordance with regulation 3B(8); “common name” in respect of a medicinal product means the non-proprietary name or if one does not exist, the usual common name; “ contracting authority ” in relation to a contract based on a framework agreement has the meaning given to it by section 2(1)(a) of the Procurement Act 2023 (but as if section 2(5)(b), and the reference to paragraph (b) in section 2(5)(d)(ii), were omitted), regulation 3 of the Public Contracts Regulations 2006 , regulation 3 of the Public Contracts (Scotland) Regulations 2012 , regulation 2 of the Public Contracts Regulations 2015 or regulation 2 of the Public Contracts (Scotland) Regulations 2015 under which the relevant framework agreement was concluded; “ duration of supplementary certificate ” is to be construed in accordance with article 13 of Regulation (EC) 469/2009 of the European Parliament and of the Council of 6th May 2009 concerning the supplementary protection certificate for medicinal products ; “ final quarter ” means the last quarter in a financial year; “ financial year ” has the meaning given to it under section 390 of the Companies Act 2006; “ framework agreement ” means— a framework as defined in section 45(2) of the Procurement Act 2023, where the framework was awarded under that Act; a framework agreement as defined in— regulation 2 of the Public Contracts Regulations 2006, regulation 2 of the Public Contracts (Scotland) Regulations 2012, regulation 33(2) of the Public Contracts Regulations 2015, or regulation 2 of the Public Contracts (Scotland) Regulations 2015, where the relevant agreement was concluded under those regulations; “ gross sales income ” means income from sales, excluding value added taxes, and before deduction of all trade and other discounts (howsoever named) including settlement discounts, rebates or deduction of any payments, including penalties, made under these Regulations; “ group ” has the meaning given to it under section 474(1) of the Companies Act 2006; “ health service use ” means used to any extent for the purposes of— the health service continued under section 1(1) of the 2006 Act; health care provided by virtue of Health and Social Care (Reform) Act (Northern Ireland) 2009 ; the health service within the meaning of the 1978 Act; or the health service continued under section 1(1) of the 2006 Wales Act; “ individual accounts ” means accounts of the manufacturer or supplier prepared in accordance with section 394 of the Companies Act 2006; “invented name” is a name which is not the common name and is not liable to be confused with the common name; “ licensing authority ” has the meaning given to it in regulation 3(5H); “ low cost presentation ” means a presentation which has a maximum price, as determined by regulation 8, for each item of presentation of less than £2.00; “ marketing authorisation ” has the meaning given by regulation 8(1) of the 2012 Regulations; “ marketing authorisation holder ” means a manufacturer or supplier that holds a marketing authorisation; “ medicines information standard ” means the inter-operability standard for the transfer of medicines information that is published by NHS BSA in the document known as the dictionary of medicines and devices; “ net sales income ” means income from sales, excluding value added taxes, and after deduction of all trade and other discounts (howsoever named) including settlement discounts and rebates but before deduction of any payments, including penalties, made under these Regulations; “ new manufacturer or supplier ” means a manufacturer or supplier that is within its first accounting reference period; “ newer presentation ” is to be construed in accordance with regulation 3B; “ NHS BSA ” means the NHS Business Services Authority established by the NHS Business Services Authority (Awdurdod Gwasanaethau Busnes y GIG) (Establishment and Constitution) Order 2005 ; “ NHS chemist ” means any person who— provides pharmaceutical or local pharmaceutical services under Part 7 of the 2006 Act or as mentioned in section 264A(9) of that Act ; and is not also a primary medical services provider; “ non-proprietary name ” means a name which is, or which is a permitted variation of— an International Non-proprietary Name (INN); an International Non-proprietary Name Modified (INNM); a British Approved Name (BAN); a British Approved Name Modified (BANM); or an approved name, and for this purpose these names (and their permitted variations) have the same meanings as in a list of names which has been prepared and published under regulation 318 of the 2012 Regulations (list of names) and which is in force; “ older presentation ” is to be construed in accordance with regulation 3B(4) and (5); “ originator ” means, in relation to an active ingredient, or in the case of a combination medicine the combination of active ingredients, of a relevant medicine for a presentation— the person who— received the first marketing authorisation for the virtual therapeutic moiety of that active ingredient or combination of active ingredients, or is not the same as the person specified in paragraph (i) but who holds a valid supplementary protection certificate for the active ingredient or combination of active ingredients; or a person who acquires the ownership of the presentation from a person specified in sub-paragraph (a); “ originator licensee ” means a person, other than an originator, who is marketing a presentation and, during the period the presentation was a newer presentation, was— doing so under a licence from the originator permitting marketing of the relevant medicine; or in the same group as the originator for the relevant medicine; “ parallel distributed presentation ” means a presentation in respect of which a parallel distribution notice with the United Kingdom as the Member State of destination has been given; “ patent protection period ” means the total period of the term of patent and if a supplementary protection certificate has been granted, the duration of the supplementary protection certificate; “ prescription only medicine ” is to be construed in accordance with regulation 5 of the 2012 Regulations; “ presentation ” means a particular form of a relevant medicine which may be distinguished from other forms of the medicine by reference to its active ingredients, strength and excipients, pack size, method of administration or formulation; “ presentation report ” is to be construed in accordance with the requirements of regulation 22; “ primary medical services provider ” means any person who provides primary medical services (who may be a provider of pharmaceutical services as well as primary medical services) under— Part 4 of the 2006 Act; Part 4 of the 2006 Wales Act; section 2C of the 1978 Act , a contract under section 17J of the 1978 Act or an agreement under section 17C of the 1978 Act ; or Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 ; “ public contract ” means— a contract of a kind specified in section 3(2) of the Procurement Act 2023, where the contract was awarded under that Act; a public contract as defined in— regulation 2 of the Public Contracts Regulations 2006, regulation 2 of the Public Contracts (Scotland) Regulations 2012, regulation 2 of the Public Contracts Regulations 2015, or regulation 2 of the Public Contracts (Scotland) Regulations 2015, where the relevant contract was awarded under those regulations; “ quarter ” means, in relation to a financial year which is of at least three months duration, the three month period beginning on the first day of the financial year, and every subsequent three month period in that year even if there are more than four such periods in that financial year; “ relevant medicine ” means a health service medicine— which is a branded medicine or a biological medicinal product (whether or not it is a branded medicine) ; which is a medicine in respect of which a marketing authorisation has been granted; which is a prescription only medicine; and which is not— in relation to England, listed in Schedule 1 to the National Health Service (General Medical Services Contracts) (Prescription of Drugs etc.) Regulations 2004 , in relation to Scotland, specified in any directions given by the Scottish Ministers under section 17N(6) (other mandatory contract terms) of the 1978 Act as being drugs, medicines or other substances which may not be ordered by a contractor made under section 17J for patients in the provision of primary medical services under a general medical services contract made under section 17J (health boards power to enter into general medical services contracts) of the 1978 Act in relation to Scotland, in relation to Northern Ireland, listed in Schedule 1 to the Health and Personal Social Services (General Medical Services Contracts) (Prescription of Drugs Etc.) Regulations (Northern Ireland) 2004 , or in relation to Wales, listed in Schedule 1 to the National Health Service (General Medical Services Contracts) (Prescription of Drugs Etc.) (Wales) Regulations 2004 ; “ relevant NHS BSA online gateway ” means the service provided for on the NHS BSA website for receiving information for the purpose in question ; “ relevant UK hospital ” means— a UK health service hospital; or any other body (not being a public authority) that is responsible, under the arrangements for managing a hospital that supplies UK health service products to patients, for purchasing those health service products; “ remaining period ” means— in relation to a financial year which is of less than three months' duration, the entire financial year ; in relation to a financial year which is of more than three months' duration, any part of that financial year, which cannot be more than three months, falling after the final quarter; “ sales report ” is to be construed in accordance with the requirements of regulation 21(1); “ small manufacturer or supplier ” is to be construed in accordance with Schedule 2; “ statutory audited accounts ” means— in relation to individual accounts of the manufacturer or supplier required to be audited in accordance with Part 16 of the Companies Act 2006, the individual accounts audited in accordance with Part 16 of that Act; in relation to individual accounts of the manufacturer or supplier exempt from audit under Part 16 of the Companies Act 2006 in accordance with section 477 of that Act, the individual accounts of the manufacturer or supplier; in relation to individual accounts of the manufacturer or supplier exempt from audit under Part 16 of the Companies Act 2006 in accordance with section 479A of that Act, the consolidated accounts of the parent undertaking in the same group as the manufacturer or supplier as referred to in subsection (2)(c) of that section; “ supplementary protection certificate ” has the meaning given by section 128B(2) of the Patents Act 1977 ; “ supply ” means supply by way of sale unless the context otherwise requires; “ term of patent ” is to be construed in accordance with section 25 of the Patents Act 1977 ; “ unbranded generic health service medicine ” means a health service medicine the labelling of which includes the common name of the medicinal product but does not include an invented name; “ UK health service hospital ” means a body which — is mentioned in Part 3 of Schedule 1 to the Freedom of Information Act 2000 and is responsible, under the arrangements for managing a hospital that supplies UK health service products to patients, for purchasing those health service products; or is mentioned in Part 4 of Schedule 1 to the Freedom of Information (Scotland) Act 2002 and is responsible, under the arrangements for managing a hospital that supplies UK health service products to patients, for purchasing those health service products; “ vaccine originator ” means, in relation to an active ingredient or a combination of active ingredients of a relevant medicine for a presentation that is a vaccine— the person who— received the first marketing authorisation of any presentation for the applicable virtual therapeutic moiety, is not the same person specified in paragraph (i) but who holds a valid supplementary protection certificate for the active ingredient or combination of active ingredients, or if different from the persons specified in paragraph (i) or (ii), was the first person to place the relevant medicine on the market for health service use and, at the time, the licensing authority designated the presentation to include a new active substance; or a person who acquires the ownership of the presentation from a person specified in sub-paragraph (a); “ vaccine originator licensee ” means a person, other than a vaccine originator, who is marketing a vaccine and was, during the period the presentation is a newer presentation— doing so under a licence from the vaccine originator permitting the marketing of the relevant medicine; or in the same group as the vaccine originator for the relevant medicine; “ virtual therapeutic moiety ” means the abstract representation of an active ingredient or active ingredients of a relevant medicine formulated in the medicines information standard as— a medicinal product; or in the case of a vaccine, an indication or indications; “ voluntary scheme ” means a scheme referred to in section 261(1) of the 2006 Act ; “ voluntary scheme presentation ” means a presentation covered by a voluntary scheme at the time of supply of that presentation; “ wholesale dealer's licence ” is to be construed in accordance with regulation 18 (wholesale dealing in medicinal products) of the 2012 Regulations; and “ wholesaler ” means a person who— is a holder of a wholesale dealer's licence; and is not a primary medical services provider, NHS chemist or UK health service hospital. 3 Where, under these Regulations, something is to be done within a specified number of— a days of an occurrence, that number of days includes the day of the occurrence; or b months of an occurrence, the first month starts on and includes the day of the occurrence (so a three month period starting on the 1st January ends on 31st March). 4 Where, under these Regulations, the amount of interest on, or a penalty for, an unpaid amount that is overdue is calculated by reference to a number of days— a the day on which payment in full is received does not count towards the calculation of that number of days; and b in the event of part payment, interest on the outstanding amount is to be recalculated from the start of the day of the part payment. 5 Where under these Regulations, information in any form is required to be provided via a relevant NHS BSA online gateway, unless the contrary is proved— a the use of that online gateway is presumed to have resulted in the information being successfully provided only if the information has been successfully recorded by the NHS BSA; b the time of providing that information is presumed to be the time recorded by the NHS BSA as being the time it was provided; c the person providing the information is presumed to be the person identified as such in any information recorded by the NHS BSA; and d a return made on behalf of a body corporate is presumed to be a return made with the authority of that body corporate. Application 2 These Regulations do not apply to any manufacturer or supplier to whom a voluntary scheme applies (all of whose relevant medicines are covered by that scheme). PART 1 PAYMENT SCHEME Payment scheme 3 1 Subject to paragraphs (1AA), (1AB), (4) and (5A) , the manufacturer or supplier that is responsible for the first relevant supply of an item of presentation must pay for the applicable period specified in the first column of the table below the payment percentage specified in the— a second column for each newer presentation; or b third column for each older presentation, 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 Period Newer presentation payment percentage Older presentation payment percentage 1st July 2026 to the end of 2026 16.5% 11% 1st January 2027 to the end of 2027 and any subsequent calendar year 16.5% 10.9% 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 1st January 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. 1AA Subject to paragraph (4A), in addition to any sum that may be required to be paid under paragraph (1)(b), the manufacturer or supplier that is responsible for the first relevant supply of an item of presentation that is an older presentation must pay the payment percentage calculated in accordance with regulation 3A of the net sales income received in respect of that supply to the Secretary of State in accordance with Schedule 1. 1AB Where paragraph (1AC) applies, the newer presentation payment percentage referred to in paragraph (1) for the period beginning on 1st July 2026 and ending at the end of 2026 is 8.7% and not 16.5% . 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 2026 and ending at the end of 2026 , if, in respect of any 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 2026 and ending at the end of 30 June 2026 ; and b the applicable payment percentage was 24.3% . 1B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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), paragraphs (1) and (1AA) do 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 presentation; 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. 4A Paragraph (1AA) does not apply to the net sales income received by a manufacturer or supplier in respect of the supply of— a any item of presentation that is a plasma derived medicinal product; or b any item of presentation that is an older presentation where the cumulative net sales income from all older presentations with a common relevant virtual therapeutic moiety that the manufacturer or supplier supplies for health service use does not exceed £1,500,000 during a relevant calendar year. 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. 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. 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; “ plasma derived medicinal product ” means a presentation that includes an active ingredient from any of the following virtual therapeutic moieties— albumin human; anti-D immunoglobulin; C1- esterase inhibitor; factor VIII plus von Willebrand factor; factor X; factor XIII; fibrinogen; high purity factor IX; human alpha 1 -proteinase inhibitor; human prothrombin complex concentrate; normal immunoglobulin human; protein C human; or von Willebrand factor; “ 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. Older presentation additional payments 3A 1 Subject to paragraphs (2) to (4), the manufacturer or supplier responsible for the first relevant supply of an item of presentation that is an older presentation must pay in relation to the observed price decline 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 for that item of presentation during the relevant period. Table 1 Observed price decline Payment percentage 10% or less 25% 11% 24% 12% 23% 13% 22% 14% 21% 15% 20% 16% 19% 17% 18% 18% 17% 19% 16% 20% 15% 21% 14% 22% 13% 23% 12% 24% 11% 25% 10% 26% 9% 27% 8% 28% 7% 29% 6% 30% 5% 31% 4% 32% 3% 33% 2% 34% 1% 35% or more 0% 2 Subject to paragraphs (3) and (4), the observed price decline for a relevant supply made by a manufacturer or supplier of an item of presentation that is an older presentation, where the average presentation selling price for the relevant period is lower than the reference price, is one minus the quotient of the average presentation selling price for that relevant period divided by the reference price expressed as a percentage rounded to the nearest whole number. 3 If the average presentation selling price of an item of presentation that is an older presentation is higher than the reference price for a relevant period, the observed price decline for that relevant period is to be 10% or less and the corresponding payment percentage in the second column of the table in paragraph (1) is to apply to the net sales income of the presentation for the relevant period. 4 Where— a there is a commercial relationship in relation to an item of presentation that is an older presentation supplied by a manufacturer or supplier who is not an originator, originator licensee, vaccine originator or vaccine originator licensee; and b that commercial relationship is between that person and a manufacturer or supplier who is an originator, originator licensee, vaccine originator or vaccine originator licensee, the payment percentage in Table 1 applicable to the relevant item of presentation supplied by the manufacturer or supplier in accordance with regulation 3(1AA) is to be no less than that which would apply to the originator, originator licensee, vaccine originator or vaccine originator licensee had they made the supply. 5 The “ relevant period ” in relation to the supply of an item of presentation that is an older presentation is the calendar year in which the supply is made except if, part way through the calendar year— a the presentation becomes an older presentation, in which case the relevant period is to be from the start of the next calendar quarter following the day on which the item of presentation ceased to be a newer presentation and runs to the end of that calendar year then (subject to any further application of this paragraph) each subsequent calendar year thereafter; b the supply is the first relevant supply by a manufacturer or supplier who is not an originator, originator licensee, vaccine originator or vaccine originator licensee, in which case the relevant period starts on the day of the first relevant supply of the item of presentation and runs to the end of the calendar year then (subject to any further application of this paragraph) is each subsequent calendar year thereafter; or c the manufacturer or supplier becomes liable to make a payment in accordance with regulation 3 for the first time, in which case the relevant period starts on the day after the manufacturer or supplier becomes liable to make a payment and runs to the end of that calendar year then (subject to any further application of this paragraph) is each subsequent calendar year thereafter. 6 In this regulation— “ average presentation selling price ” means, in relation to the supply of an item of presentation by a manufacturer or supplier during a relevant period, the quotient of the total net sales income during the relevant period divided by total quantity supplied during the relevant period (the calculation is to be based on information in the relevant presentation report, provided that the Secretary of State considers that information is accurate); “ commercial relationship ” means a contractual or other business relationship, whether or not legally enforceable, regarding the manufacturing or supplying of an item of presentation including, but not limited to, licensing; “ reference price ” has the meaning given to it in regulation 3C(9). Meaning of newer presentation and older presentation 3B 1 Paragraphs (2) and (3) set out different conditions for items of presentation that are combination medicines and vaccines, but subject to those paragraphs, a newer presentation is an item of presentation supplied for health service use by a manufacturer or supplier who is an originator or originator licensee in respect of that presentation— a during the period of time there is an extant supplementary protection certificate for the active ingredient of any relevant medicine with the same relevant virtual therapeutic moiety as the presentation; or b where no supplementary protection certificate has been granted in respect of the active ingredient of any relevant medicine with the same relevant virtual therapeutic moiety as the presentation, during the period of 12 years beginning on the date on which the first marketing authorisation was granted for any relevant medicine supplied for health service use that contains the active ingredient with the same relevant virtual therapeutic moiety as the presentation. 2 A presentation that is a combination medicine is a newer presentation when that item of presentation is supplied for health service use by a manufacturer or supplier who is an originator or originator licensee in respect of that presentation and— a during the period of time there is at least one extant supplementary protection certificate for the same combination of active ingredients as the unique virtual therapeutic moiety for that combination medicine; or b where no supplementary protection certificate has been granted in respect of the combination medicine— i during the period of time there is an extant supplementary protection certificate for a relevant medicine that is supplied for health service use containing a constituent active ingredient or combination of constituent active ingredients of the combination medicine, or ii where no supplementary protection certificate has been granted for a constituent active ingredient or combination of constituent active ingredients of the combination medicine, during the period of 12 years beginning on the date on which the latest presentation (P1) containing any of those constituent active ingredients was granted a marketing authorisation (that marketing authorisation being the first marketing authorisation granted for a presentation containing it or them), a relevant medicine of P1 also being the first with a marketing authorisation for the virtual therapeutic moiety of that active ingredient. 3 A presentation that is a vaccine is a newer presentation when that item of presentation is supplied for health service use by a manufacturer or supplier who is a vaccine originator or vaccine originator licensee in respect of that presentation— a during the period of time there is at least one extant supplementary protection certificate for the vaccine; b if no supplementary protection certificate has been granted in respect of an active ingredient of the vaccine and— i the vaccine was the first presentation for the relevant virtual therapeutic moiety to be granted a marketing authorisation, during the period of 12 years beginning on the date the first marketing authorisation is granted for the presentation, or ii the licensing authority designates an active ingredient of the vaccine as a new active substance, for a period of 12 years from the date the vaccine is first placed on the market for health service use; or c if it is a line extension of a presentation to which sub-paragraph (a) or (b) applies, during the period that sub-paragraph (a) or (b) applies to the relevant presentation. 4 An older presentation is any item of presentation that is not a newer presentation. 5 A newer presentation becomes an older presentation on the day after that presentation is no longer capable of satisfying the conditions for being a newer presentation in accordance with paragraphs (1), (2) or (3). 6 Where a presentation is a newer presentation because paragraph (1)(a), (2)(a), (2)(b)(i) or (3)(a) applies, if the relevant supplementary protection certificate— a is invalidated for any reason, paragraph (5) applies from the day following the day on which it would have ceased to satisfy the conditions for being a newer presentation in accordance with paragraphs (1), (2) or (3) otherwise than in reliance on the invalidated supplementary protection certificate; b lapses as a consequence of the marketing authorisation to which that supplementary protection certificate relates being withdrawn, paragraph (5) applies for the period beginning on the day following the day on which the relevant marketing authorisation was withdrawn and ending on the day before the day on which the relevant marketing authorisation or supplementary protection certificate is reinstated (and so the presentation becomes a newer presentation); or c is surrendered, paragraph (5) applies from the day following the day on which the relevant supplementary protection certificate is surrendered. 7 The Secretary of State may, by giving an information notice, require a manufacturer or supplier to provide information to evidence that a presentation has been correctly classified as a newer presentation, older presentation or combination medicine in accordance with this regulation, including to provide any supplementary protection certificate and marketing authorisation data. 8 For the purposes of these Regulations, a combination medicine is a relevant medicine containing two or more active ingredients— a that has a unique virtual therapeutic moiety that is distinct from all other virtual therapeutic moieties of any of the constituent active ingredients of the relevant medicine; or b in respect of which there is no unique virtual therapeutic moiety specified in the medicines information standard, but the Secretary of State determines, by direction, the relevant medicine is a combination medicine despite not satisfying sub-paragraph (a) for the purpose of determining payments due or other pricing matters in connection with these Regulations to a manufacturer or supplier who supplies the presentation for health service use. 9 In this regulation— “ period of time ” in relation to a supplementary protection certificate, means the period of time beginning on the day on which the supplementary protection certificate came into force and ending on the day on which the certificate lapses or is surrendered or is invalidated for any reason; “ relevant virtual therapeutic moiety ” means— the virtual therapeutic moiety associated with an active ingredient, combination of active ingredients or combination medicine, as applicable, for a particular presentation; or where there is no suitable virtual therapeutic moiety in the medicines information standard for the active ingredient or combination of active ingredients for a particular presentation, the Secretary of State may, by direction, give an approximation of a virtual therapeutic moiety for the purpose of determining payments due or other pricing matters in connection with these Regulations to a manufacturer or supplier who supplies the presentation for health service use. 10 This regulation does not apply to a small manufacturer or supplier. Reference prices for older presentations 3C 1 The Secretary of State must, by direction, determine the reference price of each older presentation to the manufacturer or supplier who has supplied that item of presentation and is liable to make a payment in accordance with regulation 3(1AA). 2 Whether or not the Secretary of State has received a request under paragraph (3)— a the Secretary of State may, by direction, to the manufacturer or supplier who has supplied the item of presentation, change or alter a reference price if the Secretary of State considers it is reasonable to do so; and b the changed or altered reference price is to apply, unless stated otherwise in the direction, from the date of the relevant direction. 3 Except where a direction under paragraphs (1) or (2) has previously been given to the manufacturer or supplier, a manufacturer or supplier who may be required to make a payment under regulation 3 during a relevant period must make a request to the Secretary of State for a reference price for each older presentation— a where the circumstances in regulation 9(1) apply, at the same time as they are required to make a notification under regulation 9(2); or b in any other circumstance where the manufacturer or supplier does not have a direction specifying the reference price for a particular older presentation, within 30 days of the manufacturer or supplier becoming aware they may be liable to make a payment under regulation 3(1AA) in respect of the presentation. 4 A request made under paragraph (3) must— a be made in writing; b specify the details of the presentation in respect of which the request is made; and c include any relevant information relating to the factors set out in regulation 3D(5). 5 Subject to paragraph (6), the Secretary of State must, by direction, within a period of 90 days following receipt of the information to be included in a request under paragraph (3) or paragraph (7), determine the reference price of the item of presentation to the relevant manufacturer or supplier. 6 Where the number of requests received by the Secretary of State under paragraph (3) makes it impracticable for the Secretary of State to determine the reference price to a manufacturer or supplier in accordance with paragraph (5), or insufficient information has been provided, the Secretary of State may extend that period for a further 60 days and must notify the manufacturer or supplier within the 90 day period. 7 Within 28 days of receiving the information to be included in a request under paragraph (3), where further information is required in order to determine the reference price, the Secretary of State must give the manufacturer or supplier an information notice specifying the further information that is required. 8 The Secretary of State may, by giving an information notice, require a manufacturer or supplier to provide information— a to assist in the determination of a reference price under paragraph (1) or (2) in accordance with regulation 3D; b within 28 days of receiving the information under paragraph (7) where the Secretary of State considers that further information is required to determine the reference price for a presentation; or c where the Secretary of State considers that the average selling price, maximum price or other relevant pricing information of any relevant medicine has been altered or otherwise manipulated solely or mainly for the purpose of affecting the reference price that may be applied to an older presentation. 9 In this regulation and regulation 3D— “ reference price ” means the price assigned to an item of presentation in a direction given in accordance with paragraph (1), (2)(a) or (5); “ relevant period ” has the meaning given to it in regulation 3A(5); “ relevant virtual therapeutic moiety ” has the meaning given to it in regulation 3B(9). Determination of reference prices 3D 1 The Secretary of State must determine the reference price for an older presentation in accordance with this regulation. 2 The reference price for a presentation that was an older presentation on or after 1st January 2015 and is supplied for health service use by a manufacturer or supplier who is an originator, originator licensee, vaccine originator or vaccine originator licensee or a person who is in the same group as the originator, originator licensee, vaccine originator or vaccine originator licensee in relation to that presentation, where it was first made available for health service use— a before the reference anchor date, is the average selling price of the presentation during the full calendar year before the presentation became an older presentation; or b on or after the reference anchor date, is the average selling price during the full year before the presentation became an older presentation of the most relevant comparator with the same virtual therapeutic moiety as the presentation that was first made available for health service use on or before the reference anchor date. 3 The reference price for a presentation which was an older presentation before 1st January 2015 and is supplied for health service use by a manufacturer or supplier who is an originator, originator licensee, vaccine originator or vaccine originator licensee or by a person in the same group as the originator, originator licensee, vaccine originator or vaccine originator licensee in relation to that presentation, where it was first made available for health service use— a before the reference anchor date, is the maximum price of the presentation on the reference anchor date reduced by 12.5%; or b on or after the reference anchor date, is to be determined based on the maximum price of the most relevant comparator for the same virtual therapeutic moiety as the presentation that had been made available for sale for health service use on or before the reference anchor date, reduced by 12.5%. 4 The reference price for a presentation which is an older presentation and is supplied for health service use by a manufacturer or supplier who is not an originator, originator licensee, vaccine originator or vaccine originator licensee or a person in the same group as the originator, originator licensee, vaccine originator or vaccine originator licensee in relation to that presentation, where it was first made available for sale for health service use— a before the reference anchor date and— i there is an alternate presentation with the same virtual medicinal product pack available before the reference anchor date which was supplied for health service use by an originator, originator licensee, vaccine originator or vaccine originator licensee, is the maximum price of the alternate presentation on the date the presentation was first made available for sale for health service use, reduced by 12.5%, or ii there is no alternate presentation with the same virtual medicinal product pack supplied for health service use by an originator, originator licensee, vaccine originator or vaccine originator licensee on or before the reference anchor date, is to be determined based on the most relevant comparator maximum price with the same virtual therapeutic moiety as the presentation on the date the presentation was first made available for sale for health service use, reduced by 12.5%; or b on or after the reference anchor date and— i there is an alternate presentation with the same virtual medicinal product pack available before the reference anchor date which was supplied for health service use by an originator, originator licensee, vaccine originator or vaccine originator licensee, is the maximum price of the alternate presentation on the reference anchor date reduced by 12.5%, or ii there is no alternate presentation with the same virtual medicinal product pack supplied for health service use by an originator, originator licensee, vaccine originator or vaccine originator licensee before the reference anchor date, is to be determined based on the maximum price of the most relevant comparator with the same virtual therapeutic moiety as the presentation that had been made available for sale for health service use on or before the reference anchor date, reduced by 12.5%. 5 When determining the reference price the Secretary of State may have regard, among other factors, to any one or more of the following— a available presentations or maximum prices for presentations supplied by the manufacturer or supplier of the applicable presentation; b available presentations or maximum prices for presentations supplied by a different manufacturer or supplier; c the active ingredients, strength, excipients, pack size, method of administration or formulation of an applicable presentation; d the virtual therapeutic moiety or the virtual medicinal product pack, as applicable, of an applicable presentation; e the similarities and differences between applicable presentations to be compared; and f the period an applicable presentation has been made available for health service use before or after the relevant reference anchor date. 6 Where there is no or incomplete average selling price or maximum price information available for a relevant date or period for an applicable presentation, the Secretary of State may rely on any available information the Secretary of State considers appropriate for comparison purposes, including— a the closest available data for calculating average selling prices for the applicable calendar year; and b the maximum price that is the closest in date to the 1st January of the relevant calendar year as published in the medicines information standard. 7 In this regulation— “ applicable presentation ” means the presentation for which a reference price is to be applied or an alternate presentation to be relied on as a comparator, as the case may be; “ reference anchor date ” means in relation to— an older presentation supplied by a manufacturer or supplier who is an originator, originator licensee, vaccine originator or vaccine originator licensee of that presentation, is the 1st January of the year before that presentation finally ceased to be a newer presentation in accordance with regulation 3B; or an older presentation supplied by a manufacturer or supplier who is not an originator, originator licensee, vaccine originator or vaccine originator licensee of that relevant medicine, is the 1st January of the year before the earliest supply of a presentation for health service use by an originator, originator licensee, vaccine originator or vaccine originator licensee with the same relevant virtual therapeutic moiety as the presentation which has finally ceased to be a newer presentation; and “ virtual medicinal product pack ” means an abstract representation of a relevant medicine as formulated in the medicines information standard which has any one or more of the characteristics of active ingredients, strength, excipients, pack size, method of administration or formulation in common with similar presentations which have been placed on the market for health service use by any manufacturer or supplier. Direction to make a payment 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 or 3A . 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 the relevant payment percentage referred to in regulation 3(1), (1AA), (1AB) 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 the relevant payment percentage referred to in regulation 3(1), (1AA), (1AB) 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. Interest payable on late payment 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— 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 where an order under section 19 of the Bank of England Act 1998 (reserve powers) is in force, any equivalent rate determined by the Treasury under that section. Penalties 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 appeals 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 , 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. PART 2 MAXIMUM PRICES Maximum price 8 1 Subject to paragraphs (2) and (4), the maximum price which may be charged by a manufacturer or supplier for the supply of each item of a presentation is the maximum price set out in the most recent direction given under paragraph (3) or regulation 9(5), (7), 10(1), 11(2), 12(2) or 13(1) in respect of that presentation. 2 Where, in respect of a presentation, there is no direction as referred to in paragraph (1), the maximum price which may be charged by a manufacturer or supplier for the supply of each item of a presentation is— a where a presentation was on sale for health service use before 1st December 2013— i the price, as determined by the Secretary of State, at which an item of that presentation was on sale for health service use without regard to any discount or variation of that price which did not have general application on that date, or ii where the Secretary of State specified an increase in the price of an item of presentation in accordance with regulation 6 of the 2008 Regulations, the specified increased price; b where the presentation was first made available for sale for health service use on or after 1st December 2013— i the price, as specified by the Secretary of State in accordance with regulation 3 of the 2008 Regulations, or ii where the Secretary of State specified an increase in the price of an item of presentation in accordance with regulation 6 of the 2008 Regulations, the specified increased price. 3 Where the price of a presentation first made available for sale for health service use on or after 1st December 2013 was not specified by the Secretary of State as set out in paragraph (2)(b)(i), the Secretary of State may specify the maximum price which may be charged by a manufacturer or supplier for the supply of each item of that presentation by direction to a specific manufacturer or supplier. 4 Subject to paragraph (5), with respect to the supply of any item of presentation supplied under a contract with a contracting authority based on a framework agreement or supplied under a public contract— a paragraph (1) does not apply where the framework agreement or public contract was entered into before the date that the direction under paragraph (3) or regulation 9(5), (7), 10(1), 11(2), 12(2) or 13(1) was given, or was entered into following a tender which closed on or before that date; b paragraph (2) does not apply where the framework agreement or public contract was entered into before the date of the coming into force of these Regulations or was entered into following a tender which closed on or before that date. 5 Paragraph (4) does not apply to any item of presentation added to a framework agreement or