Drug pricing structure set to be reformed

14 August 2007
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15 August 2007 | Paul Snell

The government plans to renegotiate drug prices with pharmaceutical firms to reduce NHS spending.

Earlier this year the Office of Fair Trading (OFT) published a report concluding £500 million of public money could be saved each year if the agreement that exists between the government and pharmaceutical firms was reformed (News, 1 March).

In an interim response to the OFT's report, Stephen Timms, minister for competitiveness, said: "We agree with the OFT that it is time to develop a pricing system which is fit for purpose for the 21st century. We must ensure any future pricing scheme delivers value, rewards innovation and ensures a fair deal."

The Pharmaceutical Price Regulation Scheme is a voluntary agreement negotiated between the government and the Association of the British Pharmaceutical Industry (ABPI). It controls the amount of profit pharmaceutical firms can make from the sale of branded drugs to NHS. The reforms recommend moving to prices based on the effectiveness of drugs, rather than profits.

The decision to renegotiate was welcomed by the OFT and the Department of Health. In response, the ABPI said it recognised the government's need to achieve value for money, but believed a stable, voluntary agreement was necessary to support R&D in the pharmaceutical industry.

SMaug2007

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