Competition watchdog the Office of Fair Trading is to continue its investigation into how prescription medicines are priced in the UK, raising pharma industry fears that the existing system could be scrapped for one less favourable to the sector.
The current Pharmaceutical Price Regulation Scheme (PPRS) has been under inquiry since September 2005, and the watchdog has now announced its probe will enter a new phase.
So far the OFT's work has involved gathering data on the markets affected by the scheme, but will now focus on assessing the effects of the scheme and comparing it to potential alternatives. The investigators say this will involve "analysing market outcomes in the UK and drawing lessons from international experience."
The PPRS allows companies to set their own prices but limits the profits they can make, and has enjoyed the backing of the government and the industry since 1957, when an early version of the scheme was established.
The final OFT report is due to be published in the first quarter of 2007.
Insiders' view: tear it down and start again. The New Zealand PHARMAC model looks like a good place to start rebuilding.
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