UK Government Agrees to Change Drug Pricing System
The UK government has issued a statement saying it plans to renegotiate the system of price controls between the National Health Service (NHS) and pharmaceutical companies.
The Department for Business, Enterprise and Regulatory Reform issued an interim response to a report published by the Office of Fair Trading (OFT) in February saying that the NHS drug price regulation scheme should be replaced with a value-based system.
“We agree with the OFT that it is time to develop a pricing system which is fit for purpose for the 21st century,” Minister for Competitiveness Stephen Timms said last week. “We must ensure that any future pricing scheme delivers value, rewards innovation and ensures a fair deal.”
The Department of Health said in an Aug. 2 statement that the secretary of state is planning to begin discussions with industry to renegotiate the Pharmaceutical Price Regulation Scheme (PPRS). “Any new agreement will recognize the contribution of the pharmaceutical industry to the UK economy through the provision of healthcare and the development of medical advances,” a Department of Health spokesperson said.
In the U.S., lawmakers have made progress this year on legislation that would allow the HHS secretary to negotiate prices with companies for Medicare Part D prescription drugs. The Senate Finance Committee passed S. 3, the Medicare Prescription Drug Price Negotiation Act of 2007, in April, while the House passed companion legislation, H.R. 4, in January. The president has threatened to veto the House bill.
The OFT report was based on successful value-based pricing systems in countries such as Sweden, Australia and Canada. According to the report, the PPRS spends approximately $15.6 billion a year on brand pharmaceuticals, often ignoring generic alternatives for common illnesses such as high cholesterol, high blood pressure and acid reflux disease.
Some drugs purchased in large quantities are up to 10 times more expensive than equally effective generic alternatives, the report said. The OFT recommended that the NHS transfer to a different scheme in which benefits to the patient determine the prices paid for medications. Switching schemes could save the NHS approximately $975.2 million a year, the report said.
In its response, the government said the NHS has made progress in increasing generic drug use and that the UK has the highest generic prescribing rate in Europe — roughly 83 percent of prescriptions are for generics. The NHS has also begun pursuing further savings through the appropriate use of lower-cost generic drugs, the government said.
The government also said it is committed to increasing the uptake of new medicines in the NHS. Furthermore, the government said it is important that a future pricing scheme provide stability, sustainability and predictability for industry.
The Association of the British Pharmaceutical Industry (ABPI) said it “welcomes the assurance from the government that any new agreement will recognize the contribution of the pharmaceutical industry to the UK economy. The ABPI believes that a stable, voluntary agreement is crucial to retain the industry’s major R&D investments — the UK’s largest.”
The government said it will continue working on possible changes to the PPRS and will discuss proposals with industry. — Breda Lund