At Hawk Pharma Consulting we have done a significant number of projects with companies working in the established molecule space; branded generics, generics plus, Cat A / M generics and repurposed molecules. The January announcement by NHSBSA on the introduction of Category H for a subset of Cat C branded products, namely those with multiple manufacturers, will surely affect that market. This article gives a brief overview but for a more detailed white paper and ongoing updates, please get in touch. Lets see if this is the end for branded generics (alternative brands as we prefer) or if we can progress albeit with a strategic repositioning.
Why is Cat H being introduced?
There are slightly different mechanisms for setting reimbursement prices for Cat A and Cat M generics but both achieve the same goal. Reimbursement is at tariff price which reflects the price of that generic product, from a number of manufacturers, at that time. Pharmacies seek out cheaper generics to maximise margin and manufacturers reduce price to win business. The NHS reimbursement price is pushed downwards by competition. Cat H seeks to do a similar thing but with branded products with multiple suppliers.
What is Cat H?
| Category | Medicines in this category | How reimbursement price is set |
| C | Branded products, single manufacturer / supplier | Tariff is the NHS list price for the product as there is no competition. |
| H | Branded products, multiple suppliers and high volumes | Tariff is to be set from manufacturers’ data on selling price (mechanism unclear) |
Pre March ’26, Cat H does not exist – generic scripts are reimbursed at tariff but that is set from the (usually premium priced) originator meaning pharmacies can make significant margin. Going forward, generic scripts will be reimbursed at the new tariff. Pharmacists will have to purchase, and dispense, lower priced products as they will be reimbursed at a lower level reflective of the market.
In many branded generic spaces, generic prescribing is low because it costs the ICB the most money. It could be that, with lower tariff prices, the desire to avoid generic prescribing is reduced and with that, the desire for specific brand prescribing also reduces.
What about branded prescribing?
Currently, if you prescribe a brand, the pharmacy is being reimbursed the NHS list price of that brand. At this time, it is unclear but, it seems likely that this will remain the case. So what? ICBs still need to reduce spend. They will still look for a lower priced product. The stakes may be raised as the tariff will inevitably be lower so any branded generic must be lower than tariff for them to drive prescribing by brand.
It seems unlikely that branded prescribing will be reimbursed at tariff but this is not 100% clear. It would “wrong” as the pharmacist could be penalised for the clinician’s (quite possibly valid) prescribing choice which, in the absence of pharmacy substitution, the pharmacy cannot affect directly.
Alternative brand / branded generic company actions?
- Suitable products will enter Cat H over time. Keep an eye on your product, its competitors, and their classification.
- Is the generic prescribing part of the branded generic product significant enough to want to compete in? Keep an eye on tariff which will drop and also competition which will likely become more keen.
- If branded prescribing is the largest part of the market watch your NHS list price vs the tariff – you will need a reason for them to prescribe by brand rather than defaulting to generic.
- In that branded prescribing space remember it is price, but not price alone – product quality, similarity, supply and other value-added elements may well play a part in decision making. For more see our article Established molecules – more than “just” generics? – Hawk Pharma Consulting …. ICBs and their prescribers need a compelling reason why it should be your brand they choose.
This is really “Cat H Lite” ….
If you’d like a copy of our more detailed white paper, updates on this subject or a discussion about how it may impact you then please email info@hawkpharmaconsulting.com